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Insights

European Obsolescence = Opportunity

Repositioning: The Evolution of European Offices 

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In Europe, the office sector faces an imminent challenge to evaluate, create and execute the right strategies for the large swathe of assets that face the dual issues of not meeting occupier needs nor being sustainable (in line with upcoming sustainability legislation).  

We will soon face a situation where the longer we wait to make the changes we know must come, the more costly it will become.  

Office markets across Europe are at risk of seeing a significant portion (76%) of office stock rendered obsolete by the end of the decade unless action is taken now.

Repositioning those assets in need is a real opportunity and in many ways a necessity.

Landlords that reinvest in their sustainability credentials, amenities, sense of place and community engagement to move their assets to deliver the best quality space will benefit from this flight to quality.

Sustainability, both in terms of legislation and occupier expectation, is a significant driving force in the risk of obsolescence in Europe.

Around half the existing stock is over thirty years old. Just 14% has been built or substantially modernised in the last ten years.  
 
The flight to quality trend is accelerating, resulting in demand for the best quality space exceeding supply in most major cities. 

Cushman & Wakefield has formed a pan-European, multi-disciplinary team as part of a global response to the office sector’s need for rethinking, reimagination, repositioning and repurposing.  

We encourage you to read the report and reach out to our specialists to get more information on the research and our office repositioning solutions. 
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Authors

Emma Swiinerton - London
Emma Swinnerton

Head of Flexible Workspace, EMEA
London, United Kingdom


+44 203 296 4200

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Sukhdeep-Dhillon-Head of EMEA Forecasting
Sukhdeep Dhillon

Head of EMEA Forecasting
London, United Kingdom


+44 (7920) 574823

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Nigel Almond - London
Nigel Almond

Head of Data Analytics
London, United Kingdom


+44 203 296 2328

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Case Studies

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DIAGONAL 123, BARCELONA

Challenge: Metropolis needed to transform their office building in Barcelona’s 22@ district due to an increasing vacancy in the building and the threat of new developments in the area.

Solution: Cushman & Wakefield advised the client to reposition the asset by upgrading the building specification, delivering improved ESG credentials and improving the user experience with new amenities, common areas and social spaces. The building was subsequently sold but Cushman & Wakefield supported the buyer through the transaction and then delivered the project through a combination of customer experience, project management and sustainability delivery teams. We subsequently successfully leased the building to a range of tenants paying top of market rents – inline with the original business plan.

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DUO, LONDON

Challenge: The developer purchased the building with vacant possession and the intention to comprehensively refurbish and reposition the asset as a ‘next generation’ office building. A key challenge of the project was to improve the arrival experience at ground level and respond to the occupier requirements around amenity and ESG.

Solution: Cushman & Wakefield worked alongside the client team to provide advice on leasing strategy and the subsequent full refurbishment and extension of the building. Cushman & Wakefield were appointed as joint leasing agents and executed a market leading pre-letting campaign which resulted in the building being 90% pre-let at practical completion. A variety of occupier sectors were secured (including legal, financial and tech), attracted by the quality of the building repositioning, strong ESG credentials and market leading amenity provision.

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NASSAUKADE, ROTTERDAM

Challenge: The client requested services in the divestment of their ownership in Rotterdam, an inner city redevelopment opportunity. The size, type and timing of the development was unclear.

Solution: Cushman & Wakefield analysed a number of different scenarios ranging from as-is to a complete re-development of the asset. Once a strategy was agreed Cushman & Wakefield worked together with the owner and the Municipality of Rotterdam to run a selective multi phase tender process for the divestment. The process resulted in a strong outcome for our client with the Rotterdam based developer VORM being appointed.

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TWEED BUILDING, BRUSSELS

Challenge: An obsolete office building was purchased with the initial aim of converting it into high end residential units.

Solution: Our experts, with their knowledge of the market dynamics and understanding of the current and future competition, convinced the developer to opt for an office redevelopment with the highest environmental standards to attract quality occupiers, thanks to the strategic location, Cushman & Wakefield found a co-investor who acquired 50% of the project. On delivery the Cushman & Wakefield leasing team let the building to a number of triple A tenants who are now enjoying a state-of-the-art office building. The Cushman & Wakefield Capital Markets team finally supported the disposal of the asset in an off-market transaction achieving a highly competitive yield.

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VIALE SARCA, MILAN

Challenge: A major tenant had relinquished several floors of a prominent modernist building. As a portion of the spaces had been occupied by support functions such as cafeteria, bank and post office, they had to be evaluated to identify the most appropriate new sector.

Solution: Having a mandate to manage the whole building, Cushman & Wakefield through its integrated Asset and PDS teams was able to support the client in envisioning a new life for these floors, converting them into state-of-the art office spaces by delivering Design, statutory Direction of the Works and Project Management services for the refurbishment activities. The Leasing team went on to find the right tenant mix for the reconfigured building.

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