Demand for modern office spaces continue to increase in 2022 Q2, the best quarter so far since the start of the pandemic. New demand in parts of Europe reached 73,500sqm in the early half of the 2022, according to Colliers experts, which is about double compared to last year. The heighted demand acceleration can be attributed to a portion of the companies holding back development plans during the pandemic period and now setting in motion these plans as pandemic measures eases up.
The divide between total demand and new demand has been fascinating; with one expanding gradually and another expanding sharply. This might indicate there was an overestimation of companies who reduces their office presence amid the rise of hybrid work. That being said, hybrid work transformation continues to be a strong trend and is expected to continue – companies might soon have to look into making decisions on how to modernize their office to cater for the future. Clarity is yet to be available in the face of heightened economic uncertainty worldwide.
Occupancy has increased in most of the large office markets, especially for buildings in high-quality locations where vacancy rates are in single-digit region. Upside pressures on rent continues to hike firmly as demand picks up and perhaps in part due to inflation. Office leasing activities might recover soon to pre-covid levels within the coming years.
Notably, new themes of office spaces are emerging to meet the needs of the changing way of work. Expectations of workspace have been changed after Covid-19 pandemic. Many office spaces are going through major reconfiguration as employers and employees comes together to address the expectations on both sides.