Never before have so many office buildings been empty as they are now. In North America and Asia in particular, people are increasingly working from home.
According to a study, in the midst of the trend towards working from home, more offices worldwide are empty than ever before. The vacancy rate was at a record high of 15.6 percent in the first half of the year, according to real estate specialist Jones Lang LaSalle (JLL) in Frankfurt. While the rate in Europe remained unchanged at 7.6 percent, it rose significantly to over 15 percent in Asia-Pacific and to a good 20 percent in North America – so every fifth office there was empty. Around 100 real estate markets worldwide were analyzed for the evaluation.
In the first half of the year, office lettings fell worldwide, especially in Europe. Here, take-up fell by a quarter, also in view of the weak economy. Businesses have focused on moving to mostly smaller, sustainable and more centrally located spaces or renegotiating ongoing leases to cut costs, said JLL expert Hela Hinrichs.
Nevertheless, more offices are built
JLL estimates that the vacancy rate for offices with more than 17 million square meters of completed space will continue to rise by the end of the year. “From 2024, however, the construction pipeline will be significantly smaller and the availability of high-quality office space will decrease significantly as demand increases,” said Hinrichs.
Since the corona pandemic, the home office has firmly established itself in working life – even if some companies are now obliging their employees to do more office work again. In Germany, around 61 percent of companies allow their employees to work from home for a few days, according to a recent survey by the Ifo Institute. For companies with more than 500 employees it is even 94 percent.
The changed world of work has consequences for the real estate market: According to the Association of German Pfandbrief Banks, prices for office real estate fell by almost ten percent in the second quarter. In the USA, a crisis has been brewing in commercial real estate due to high vacancy rates and rising interest rates, which is already weighing on bank balance sheets.