Office Rental Market - May 2020
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Q1 figures do not yet reflect the full impact of the Covid-19 health crisis.
Given the lockdown only started on 17 March, it is difficult to assess its impact on the last two weeks of March.
However, the take-up slowdown observed at the end of 2019 continued. Take-up dropped by -37% compared with Q1 2019.
Decrease in demand is likely to accelerate in coming quarters as companies struggle to manage the impact of the global health crisis and delay their plans as they recover.
For several companies, real estate will be a secondary consideration. Companies will instead prioritise resuming operations and addressing the problems related to resuming activity after lockdown.
Rents are therefore likely to be affected. First, incentives will in all likelihood increase in neighbourhoods that lack supply, such as the CBD; second, prime headline rent will undoubtedly decrease.
There will probably be fewer companies that can afford rents around €900.
In sectors with more vacant space, rents may drop even further. However, we can hope that as companies seek to reduce costs, some sectors could benefit from delayed demand and therefore suffer less from plummeting rents.
Demand will only fully rebound when there is a clearer view of how to emerge from this crisis: will the 11 May be confirmed as the date for easing lockdown restrictions, and will there be a second wave following this period?
Only the hope offered by an effective treatment or vaccine will restore companies' confidence and allow them to plan for the future. However, one thing is certain. Companies will have reconsidered their working methods, and working from home will undoubtedly become more routine in future. Offices where employees come together to work will have to function as loci of collaboration with a focus on well-being at work.
Q1 figures do not yet reflect the full impact of the Covid-19 health crisis. Given the lockdown only started on 17 March, it is difficult to assess its impact on the last two weeks of March.