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Office market overview | 2020

1.

Updated: February 14, 2021

In 2020, the weighted average rent declined in unclassified business centres by 3%, amounting to USD 13.9 per sq m. The figure decreased by 3% in class B and by 1% in class A business centres.

A 1 % increase has been observed in class C business centres equalling to USD 11.4 per sq m.

Weighted Average Rent in Modern Business Centres by Class (USD, sqm, net of VAT), 2019-2020
2019
2020

2.

Updated: February 14, 2021

The overall vacancy rate of modern business centres accounted for 24%, increasing by 10 percentage points when compared to 2019.

Vacancy Rate in Modern Business Centres by Class (%), 2019-2020
2019
2020

3.

Updated: February 14, 2021

The weighted average rent of contracts signed during the pandemic is 15% lower than the weighted average rent in 2019. The figure is 7% and 19% higher in class A and class C business centres amounting to USD 24.1 and USD 13.4 per sq m. While the weighted average rent of new/renewal contracts has decreased in class B and unclassified business centres by 4% and 12%, respectively.

The weighted average rent of new/renewal contracts in 2020 vs. the weighted average rent in 2019.
2019
2020

Expectations and opportunities

Business centers and their owners will need to be prepared for the reopening of offices by ensuring infrastructural health & safety practices in their spaces.
Keeping distance is becoming a primary objective, especially in offices with open planning. Regulations addressing the area per person ratios could be introduced to ensure the personal safety of the workforce.
In the short-term, opportunities for negotiating contract terms will appear for those with long-term contracts. In this critical period, landlords are advised to meet their tenants’ requests and review existing contract terms in order to keep the centers occupied.
According to international forecasts, even in case of an extension of light quarantine, decentralized workspaces and isolated areas will become preferable to centralized offices where all the workers share the same space. There is a chance that demand will appear for workspaces located close to residential buildings and street retail properties, seeing new opportunities for office development appearing.
The trend of integrating technological solutions- such as remote services, cleaning and disinfection by robots, low touch infrastructure, virtual tours, etc. -will be on the rise. The majority of these costs will have to be carried by business center owners. Gaining a competitive edge on the market will depend on these factors being taken into account.