Credit Suisse’s Swiss Office Property Market 2022 study: home working trend is likely to keep impacting the office property market for several more quarters

Credit Suisse’s Swiss Office Property Market 2022 study: home working trend is likely to keep impacting the office property market for several more quarters

(PRESS RELEASE) ZÜRICH, 8-Dec-2021 — /EuropaWire/ — Credit Suisse, a global wealth manager, investment bank and financial services firm, has announced the publication of its study on the Swiss office property market. The full report made in English and called “Swiss Office Property Market 2022” is available for downloading on the bank’s web site.

Switzerland’s office property market cannot escape the repercussions of the COVID-19 pandemic. The supply rate has risen over the last year from 5.5% to 5.8%, although this increase remained below the feared high levels. In the assessment of the real estate economists of Credit Suisse, demand is holding up better than expected. Nonetheless, the home working trend is likely to cast its shadow over the office property market for several more quarters. In the long term, by contrast, the transformation of the working world should result in a substantial increase in demand for modern office properties, thereby acting as a strong future counterbalance to the phenomenon of home working.

Whereas the advertised supply of space in the likes of London and New York shot up dramatically in the wake of the COVID-19 pandemic, the supply of available space in Switzerland as of the end of the second quarter of 2021 had risen only modestly compared to the same quarter of the previous year, namely from 5.5% to 5.8%. Although many tenants are facing considerable uncertainty over their future need for office space, the market has also seen a number of rental contract extensions and new signings – particularly for reasons of location optimization or workforce concentration.

Hesitant demand for office space
The traditionally strong correlation between growth in office work and demand for office space has ceased to apply against the backdrop of the pandemic. Despite the relatively robust development of office employment, many companies are holding back from renting new premises, particularly as mastering the pandemic is proving a protracted struggle and the home working trend has strengthened as a result. Over the next few years, demand for office space is likely to suffer from an increasing number of companies allowing their employees to work at least partly from home, even after COVID-19. The real estate economists of Credit Suisse still consider last year’s forecast – namely that the coronavirus-assisted breakthrough of home working would result in a decline in the requirement for office space in Switzerland of around 15% over the medium term – to be a reasonable estimate. However, this development will be counterbalanced by economic growth and the increasing proportion of office-based activities as a result of the digitalization effect. In consequence, the real estate economists are predicting a net result of stagnating demand for office space in the medium term.

Supply of office space again rising – but less sharply than expected
As a direct consequence of sluggish demand, the volume of advertised office space is currently rising in all regional sub-markets, without exception. In absolute terms, supply in the office markets of Switzerland’s large centers is rising most strongly in the municipalities of the wider conurbations outside of city centers (outer business districts). In percentage terms, however, supply has risen most strongly in the inner cities themselves. Higher supply rates are particularly evident in the sub-markets that are currently seeing a high volume of new space coming onto the market. For example, vibrant construction activity in Basel is contributing significantly to the rise in the supply of available space in this large center. By contrast, the comparatively intact situation of the Zurich office market is closely linked to subdued construction activity. Geneva and Lausanne make for an interesting comparison: Whereas weak demand in the former has resulted in the supply rate rising to 12.3%, the latter has benefited from relatively robust demand, despite a high level of construction activity, with the result that the supply of space has risen much less strongly here.

Investors planning less office space
Over the last 12 months, the volume of planned investment to have received construction approval stands at CHF 1,598 million. This is some 17% below the long-term average since 1995. Investors have become more cautious with their office construction plans, and are waiting on the sidelines with new projects until there is greater clarity over the future need for office space. In a long-term comparison, approved investment volumes for office renovations are languishing at a low level. Developers typically prefer replacement new builds over renovations. Conversions of office space to apartment use, which are increasingly being considered – particularly in the Bern office property market – are not included in these figures. This restraint on the part of investors is likely to help prevent excessive imbalances building up in most office property markets over the next few quarters.

Home working trend to hold back demand for space only temporarily
The real estate economists at Credit Suisse have used a study on sector developments until 2060 commissioned by two federal government departments to predict the development of office employment until 2060, and have then taken this as a basis for forecasting long-term demand for office space. Current trends such as employment growth, the digitalization of many spheres of work, and the home working trend have a conflicting impact on this development. While home working will reduce the demand for space in the medium term, the increasing digitalization of all areas of life and work will increase the proportion of office-based jobs in all sectors, resulting in a significant need for additional office space in the longer term. Between 2000 and 2019, the average proportion of workers in Switzerland carrying out office-based activities rose from 34% to 45%. According to the models of the real estate economists of Credit Suisse, this figure should climb further and reach 60% by 2060. Over time, this effect should offset the decline in demand caused by home working, resulting in a significant increase in demand for office space in the long term.

Immediate outlook mixed
In the short term, demand for office space will be shaped by two conflicting developments. On the one hand, the absorption of space will continue to prove difficult and lag behind typical absorption levels, despite the increase in employment growth. A further rise in the supply rate is therefore possible, particularly as there have so far been only a few examples of companies giving up large premises or scaling down premises as a result of the COVID-19 pandemic. Downsizing plans of this kind do exist, however. On the other hand, there is now also likely to be a certain amount of pent-up demand. The real estate economists of Credit Suisse are forecasting a further increase in the supply of available space, above all for large premises as well as premises on the urban periphery. Next year, they are expecting a further rise in vacancies as well as persistent pressure on rental prices, with the decline in rents possibly being rather higher than this year’s minus 0.1%.

Figure: Expansion and supply in Switzerland’s large and mid-sized centers
Circle size: existing office space; expansion: building permit issuance for last four years compared to long-term average; supply rate in % of existing space in 2018

The full study “Swiss Office Property Market 2022” is available in English here.

Credit Suisse
Credit Suisse is one of the world’s leading financial services providers. Our strategy builds on Credit Suisse’s core strengths: its position as a leading wealth manager, its specialist investment banking capabilities and its strong presence in our home market of Switzerland. We seek to follow a balanced approach to wealth management, aiming to capitalize on both the large pool of wealth within mature markets as well as the significant growth in wealth in Asia Pacific and other emerging markets, while also serving key developed markets with an emphasis on Switzerland. Credit Suisse employs approximately 49,950 people. The registered shares (CSGN) of Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares (CS), in New York. Further information about Credit Suisse can be found at

Media contact:

Fredy Hasenmaile
Head of Real Estate Analysis
Credit Suisse AG
+41 44 333 89 17

Kerstin Hansen
Real estate economist
Credit Suisse AG
+41 44 334 16 55

Media Relations
Credit Suisse AG
+41 844 33 88 44



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