In Germany, new office lettings fell by 40 percent in the first half of the year. Reasons are the increased working from home and the economic situation. This raises questions for many cities.
The effects of the corona pandemic on the world of work are still noticeable and are also changing the cityscape. According to regular surveys by the Munich ifo Institute, a good quarter of employees in Germany are still working from home even after the end of the pandemic.
In some international metropolises, the proportion of homeworkers is even higher, as reported by the McKinsey Global Institute. As a result, many companies are downsizing their offices.
Desks are shared
Across Germany, new office rentals fell by 40 percent in the first half of the year compared to the previous year, as the real estate consultant Jones Lang LaSalle (JLL) reports. The development is partly due to the increased work in the home office and partly to the economic downturn.
Unused office space is expensive – in economically uncertain times, many companies decide to downsize. Some companies use vacant offices for communal areas to enable increased personal interaction on attendance days, says Simon Krause, home office specialist at the ifo Institute.
Others reduced their space requirements through “desk sharing”. Several employees share a desk. “This effect has an impact on the office market. However, this does not happen immediately, but with a delay, because many companies have long-term leases,” says Krause.
Consequences for real estate market and cities
This trend could have consequences for the real estate market, which is already under pressure due to increased interest rates and construction costs. In addition, the decline in office use is hitting inner cities particularly hard. “There are an above-average number of offices there, and the shops there are also suffering from lower retail sales because of home office,” said the ifo expert.
The development should therefore also give mayors food for thought. “Municipalities have to think about how they can further develop inner cities in order to offer an attractive mix of living, working, shopping and leisure,” says the researcher.