GREATER ZURICH OFFICE MARKET

DEVELOPMENT OF RENTS IN GREATER ZURICH

RENTS BY MARKET AREA

Rental price band
CHF/m² p.a.
Median
CHF/m² p.a.
Available space
Market changes
%
Baden 140 - 325 220 46 200 -5 %
Furttal 125 - 265 165 11 515 -29 %
Höfe 160 - 360 250 16 320 -29 %
Limmattal 135 - 280 195 41 730 -25 %
Central Glattal 150 - 330 215 105 575 -49 %
Pfannenstiel 190 - 455 300 5 315 -52 %
Rapperswil 130 - 325 205 2 840 -20 %
City of Zurich 210 - 630 375 214 140 4 %
Winterthur 145 - 345 220 23 020 -31 %
Zimmerberg / Sihltal 140 - 320 200 10 205 -60 %
Zurich Highlands 135 - 270 195 25 115 -7 %
Zurich Lowlands 120 - 240 180 16 970 -17 %
Zug 150 - 450 230 114 485 -16 %
Greater Zurich 150 -550 250 633 430 -22 %
In Greater Zurich, office space available within six months totalled approximately 800,000 m² at the end of 2020. Thus, supply rose by 8% compared with the previous year, but increased less than in other regions. This comparatively stable trend in the Greater Zurich office market conceals sharp regional variations. For example, at more than 200,000 m2, the supply of office space in central Glattal is now about the same as the city of Zurich, despite a number of marketing successes, such as the airport at Kloten. The agglomeration, with its modern office space with direct access to the S-Bahn network and numerous dining and leisure opportunities in the immediate vicinity, continues to attract tenants. However, there is little demand for properties that do not offer these features. Another trend will add further pressure in future: the sudden shift to working from home that took place in 2020 demonstrated to even conservative companies that this more flexible way of working offers advantages to both sides. As a consequence, a large majority of office tenants plan to continue allowing hybrid forms of work, with a large number of employees working from home. For this reason, the office will take on a new role as a place where employees meet and collaborate, and assume enormous significance in value creation and productivity, along with the company’s culture and employee identification. The office isn’t dead – it’s simply being used differently. This trend will lead to increasing demands on the location and the office space itself; central with good transport links, an urban environment with numerous offerings, and flexibility within the rental property. The world of work will continue to change in 2021 and beyond.

Large companies and SMEs are taking advantage of the trend of more employees working from home to consolidate their office space. The main reason is to reduce costs, a necessity for many companies that have seen a decline in revenue as a result of the pandemic. The planned reduction seems to depend to a large extent on the size of the company; corporations and large companies are looking to cut their office space in half, while SMEs plan to reduce it by a third. It is not clear if these plans will actually be implemented. On the one hand, the need for social contact in the office and fatigue with working from home as restrictions continue are growing. Furthermore, in many cases long-term rental contracts prevent rapid implementation of such plans. Some tenants are attempting to get around such limitations by subletting their space. If this trend continues, not only will supply increase further, but an erosion of rental levels is also likely; thanks to the potential cost savings, main tenants can offer their space at more favourable conditions. An assessment of the effect of coronavirus and working from home will be possible only after enough people have been vaccinated and employees can return to the office without concerns about their health.