Review 66th Swiss Real Estate Conference

Impressions of the 66th Swiss Real Estate Talk at the Metropol Restaurant in Zurich (Pictures: Silvia Greber)

Martin Bernhard, Head Research JLL Switzerland, first gave an overview of the office locations Basel, Bern, Geneva, Lausanne and Zurich in his presentation at the 66th Swiss Real Estate Conference. "The two largest markets, Geneva and Zurich, are characterized by the highest vacancy rates in Switzerland, but also by high dynamism and liquidity," Bernhard explained.

However, if one looks at the ambitions for reducing vacancies, the city on the Limmat is ahead of its big-city counterpart in French-speaking Switzerland. The vacancy rate in Zurich has fallen by eight percent in two years (third quarter), while in Geneva it has risen by more than 21 percent in the same period, which is putting pressure on prime office rents there, Bernhard continues.

Looking at international locations, however, he noted that the vacancy figures in this country were certainly respectable, as the level in London or Frankfurt, for example, was significantly higher. Referring to the project pipeline in Zurich and Geneva, Bernhard predicted a further increase in vacancy rates for both cities in the coming years.

"The right product is match decisive"

Robert Hauri from the SPG Intercity gave an insight into the current situation on the office rental market following the real estate discussion. "Leases are mainly successful in new or well refurbished buildings," he pointed out. Old building stock, on the other hand, is very difficult to market, he said. The traditionally known model of raw building rent is now almost obsolete, Hauri said. In addition, the rent is no longer the only decisive factor in negotiations. In addition to "location, location, location," the right product is now increasingly "decisive for the match" for the company asking for it.

Hauri also expects higher vacancy rates in the future than already. New settlements from Germany or abroad hardly play a role. There is some hope for the new Google location on Europaallee in Zurich, which could possibly attract demand from the tech industry. The strongest segment in terms of the required space sizes is currently to be found at around 350 square meters. In the area of large leases beyond the 500- or even 1,000-square-meter limit, however, inquiries are currently rather scarce, Hauri admitted at the real estate meeting.

"Disruptives in many areas"

Roger war From RESO Partners then noted that Switzerland's investment attractiveness with regard to office real estate had already been developing slightly negatively since 2007. At the same time, he pointed out: "We have to accept a vacancy rate of around five percent. In general, the issue of owner responsibility is gaining in importance. These days, he said, it is not enough to simply sign a lease and ask the tenant after three or after five years whether he wants to renew. Rather, Krieg says, office users need to be talked to much more often and their needs and wishes listened to.

In this context, he also made the claim at the real estate talk: "In 20 years, one-third of all space will be leased without fixed terms." The next generation wants to share many things (keywords: "sharing economy", "coworking spaces") and no longer own them or rent them on a long-term basis. This disruption, which is coming to the industry, is already evident, for example, in the housing and hotel market as well as in the areas of retail and gastronomy with increasing pop-up concepts. (mr)

• Presentation Martin Bernhard from JLL
• Presentation Robert Hauri from SPG Intercity
• Presentation Roger Krieg from RESO Partners