The geography of office demand: How occupier location strategies reveal business sector priorities

• Sectoral concentration in traditional macro-sectors. In Milan and Rome, the Services, Manufacturing, and Banking & Finance sectors have dominated office space absorption over the last five years (2021-2025). These sectors collectively accounted for 70% of the total take-up in both cities, though with different relative weights that reflect their distinct economic roles.
  
  
• Distinctive locational dynamics in sub-sectors. An analysis of sub-sectors such as Insurance, Energy, and Legal reveals specific locational strategies. While Insurance and Legal favour specific central locations, the Energy sector demonstrates greater territorial flexibility, with significant transactions also occurring in strategic peripheral areas.
  
  
• Structural divergence between Milan and Rome shapes distinct market dynamics. Milan's concentration of advanced professional and financial services sustains strong demand, though scarcity of Grade A central supply may compress absorption of increasingly selective tenants. Rome's PA-dominated demand ensures institutional stability, while enhanced quality of the supply in prime locations would unlock greater capacity to attract high-profile private occupiers, requiring market-specific investment strategies.
  
  
• Selective growth and post-2020 sectoral resilience. In the 2016-2025 decade, the analysed sub-sectors show heterogeneous evolutionary patterns. Despite a limited number of transactions, the Legal sector recorded significant growth in Milan in particular in 2025, while the Insurance and Energy sectors maintained a consistency that reflects consolidated requirements.
  
  
• Strategic Real Estate implications. The interplay between supply quality and occupier demand reveals three critical priorities: leveraging flexibility and sustainability to meet fragmented tenant needs; proactively developing or retrofitting Grade A assets to unlock latent demand, particularly in supply-constrained markets; and positioning in locations that balance connectivity and ecosystem integration, as the boundaries of prime districts continue to evolve.

The evolution of the office market in Italy's two main cities reflects profoundly different economic identities. In the last ten years (2016-2025), Milan and Rome have recorded a combined take-up of nearly six million square meters, with a sectoral composition that reveals their respective vocations.

In Milan, the Services sector leads with 35% of the total, followed by Manufacturing at 25% and Banking & Finance at 16%. In Rome, although Services also rank first at 40%, a different structure emerges: Manufacturing accounts for 15%, while Public Administration takes third place with 14%.

Milan confirms its role as the country's economic and financial capital, where the Banking & Finance sector holds a significantly higher share than in Rome (over 600,000 sq. m. in Milan versus approximately 180,000 sq. m. in Rome). The Capital, conversely, clearly demonstrates its institutional function: Public Administration in Rome absorbs 14% of total take-up, a figure that drops to a marginal 2% in Milan. This characteristic profoundly influences supply and demand dynamics, absorption cycles, and the strategies of real estate operators.

Analysing the last three years (2023-2025), the office market in Italy shows a substantial alignment with European trends. At the continental level, the top-performing sectors in terms of leased space are Professional Services, Banking & Finance, and Technology. Italy, considering Milan and Rome together, follows this trend with a slight variation: Professional Services and Banking & Finance maintain their role as driving sectors. However, the national landscape sees a greater prominence of the Manufacturing & Industry sector compared to Technology, reflecting the productive nature of the Italian economy and the consequent need for headquarters to support manufacturing activities. Another distinctive feature is the Public Administration sector, traditionally more significant in Rome. This general alignment, enriched by national specifics, highlights how the strategic locational choices of different business sectors translate into consistent demand patterns on a European scale, while retaining a clear identity tied to the country's structural economic characteristics.

The following visualisations synthesise the locational and size-based patterns of the Insurance, Legal, and Energy sectors in Milan, offering an immediate understanding of temporal trends, space requirements, and areas of concentration.

Insurance, legal and energy take-up 2016-2025 - Milan

The insurance sector in Milan represents a relatively contained demand compared to other business sectors, but it is characterized by qualitative and locational selectivity. For this specific sector, the analysis covers the 2015-2025 period, including 2015 alongside the standard ten-year timeframe (2016-2025) applied to other sectors. This methodological choice was necessary to include a transaction of strategic importance that occurred that year, which is instrumental for a more complete understanding of the sector's locational dynamics in the Milanese context.

Between 2015 and 2025, take-up by insurance company occupiers reached nearly 260,000 sq. m. across 102 transactions. Half of this take-up was concentrated in the Semicentre market, particularly in the CityLife submarket, which alone accounted for almost 40% of the total take-up. This volume of nearly 100,000 sq. m. was primarily driven by two significant owner-occupier transactions recorded between 2015 and 2016, when Generali and Allianz strategically decided to establish their headquarters in CityLife, betting on what was then one of Milan's largest urban transformations. The CityLife area, located in the west of Milan, is part of a broader ecosystem of interest for the insurance sector that also includes the adjacent Portello district. In this area, key players in the sector have adopted locational strategies that go beyond the simple acquisition of office space, developing integrated projects that combine corporate functions with broader urban regeneration initiatives, which also include residential components. Some companies, like Vittoria Assicurazioni, which established itself in the area over a decade ago, continue to invest in the territory through innovation hubs and mixed-use projects, demonstrating a long-term vision and a commitment to the qualitative transformation of the district, thus consolidating a specialized hub for the insurance sector in the western part of the city.

Porta Nuova also emerges as a locational hub, albeit with a smaller take-up (47,300 sq. m. in the last ten years), as part of the broader locational strategies of the banking and finance sector. Testifying the area's attractiveness, 2024 saw the completion of the most significant transaction in terms of surface area with the new Unipol headquarters of 15,000 sq. m., achieved through a built-to-suit operation that created a landmark building characterized by high quality standards and environmental sustainability.

It is interesting to note that there is also demand for urban regeneration areas such as Maciachini, Tortona, and Porta Romana, in addition to CityLife. This trend suggests the sector's openness to emerging districts that offer building and infrastructure quality comparable to traditional central areas but with more favourable rental bands.

Insurance sector take-up, 2015 – 2025 – Milan

The search for high-quality properties remains an essential requirement: 90% of transactions involved grade A assets. Excluding the large acquisitions mentioned above, the locational choices of the insurance sector highlight a demand for smaller spaces on average. In the last five years (2021-2025), a volume of approximately 83,000 sq. m. distributed over more than 40 transactions shows that over half of the occupiers (nearly 60%) sought spaces smaller than 1,000 sq. m. These are sizes typical of representative offices or specialized functions, outlining a profile of a widespread and diversified territorial presence compared to large strategic operations.

The year 2025 marks a significant recovery after the limited activity recorded in 2024 in terms of the number of deals. Comparing the recent five-year period with the previous decade, the growth trend appears substantially stable, suggesting that the insurance sector maintains a consolidated strategic presence.

Despite the small number of transactions, the Legal sector is a growing segment. In the 2016-2025 decade, law firms recorded an absorption of over 130,000 sq. m. for a total of 116 transactions in Milan, with an increasing average annual transacted, peaking in 2025 with nearly 30,000 sq. m. recorded, the highest volume in the analysed history.

The geographical distribution of the Legal sector shows one of the most marked concentrations observables in the Milanese market: due to its cross-cutting nature as a service to businesses, it favours central locations where accessibility and proximity to key stakeholders represent decisive competitive factors. Overall, the CBD Duomo and CBD Porta Nuova areas recorded the highest absorption with 108,000 sq. m. (of which CBD Duomo alone absorbed 78,600 sq. m.). Over half of the operations involved small spaces, with average sizes below 500 sq. m. These size requirements reflect the specific operational needs of the sector in a context characterized by high rents in central locations.

Legal sector take-up, 2016 – 2025 – Milan

The quality requirements demanded by tenants are high: almost 70% of transactions involved grade A buildings, with a residual share of grade B and a minimal presence of grade C, the latter concentrated in the pre-2020 period. This qualitative shift reflects a general renewal of the available supply in central areas and a growing awareness that the quality of spaces affects the ability to attract and retain talent.

The contract type is almost exclusively lease, confirming that the Legal sector prioritizes operational flexibility and capital allocation towards its core business.

The Energy sector is analyzed exclusively in the Milanese context, where the take-up volume is significantly more relevant and allows for a statistically robust analysis of sectoral dynamics. In the 2016-2025 decade, take-up reached nearly 192,000 sq. m. distributed across 70 transactions. Two large pre-let transactions, each of approximately 45,000 sq. m., one in 2020 in Santa Giulia and another in 2023 in San Donato, alone account for almost half of the total volume. Excluding these transactions, the annual average is just over 10,000 sq. m.

This dimensional structure reflects a flexible locational strategy. Unlike the Insurance and Legal sectors, the Energy sector shows greater territorial openness, distributing itself between the Semicentre (particularly Porta Romana), the Periphery (with a historical focus on Bicocca between 2016-2017), and the hinterland. In terms of the number of transactions, the Semicentre concentrates the most activity, suggesting a preference for locations that balance accessibility and operational costs.

When observing large corporate transactions, a specific geographical pattern emerges: the south-east quadrant of Milan is confirmed as the reference district for the sector's main corporations. San Donato maintains its historical vocation for energy, continuing to attract the headquarters of major players thanks to the availability of large spaces and more favourable rental bands. This trend was confirmed in 2023 by a significant transaction of 45,000 sq.m. Santa Giulia also hosted another of the most significant pre-let operations in 2020.

The evolution of the Porta Romana area is particularly interesting. The expected completion of the A2A Tower in this area by 2026 will consolidate the south-east quadrant's vocation as an energy cluster, creating an axis that extends from Porta Romana to San Donato through Santa Giulia. This geography reflects logics of infrastructural proximity and sectoral clustering that foster operational synergies and the sharing of specialized expertise.

Energy sector take-up, 2016 – 2025 map - Milan

Most tenants in the Energy sector (over 60%) required spaces smaller than 1,000 sq. m. This data reveals a fragmented demand for small and medium-sized operational offices, likely linked to commercial, technical, or support functions. The average rent is in the €200-300/sq. m./year range.

The quality requirements of the Energy sector are high: almost 80% of operations involved grade A assets, with the remainder concentrated on grade B buildings. The contract type is of existing assets, although two significant pre-let operations exceeding 40,000 sq. m. each were recorded in the south-east quadrant. These pre-let operations indicate long-term strategic planning by the sector's major players, who have chosen to occupy custom-made spaces under development to secure optimal solutions in terms of layout, sustainability, and functionality.

The following charts provide a synthesis of the locational dynamics of the Legal and Public Administration sectors in Rome, through the analysis of annual volumes, size distribution, and geographical concentration.

Legal and public administration take-up 2016-2025 - Rome

In Rome, the legal sector is smaller in scale compared to Milan. In the 2016–2025-decade, take-up reached nearly 37,000 sq. m. distributed across 48 transactions. The locational strategy is almost exclusively focused on the Centre and CBD, which absorbed 35,500 sq. m. through 44 operations.

Take-up 2016-2025 – Legal Rome

The average rent paid by tenants is in the €400-500/sq. m./year range, levels comparable to those in Milan, reflecting the strong pressure on the limited central supply. However, a significant qualitative difference emerges compared to Milan: almost 60% of transactions involved grade B properties, while only 40% concerned grade A buildings.

This data does not reflect a lower qualitative preference from Roman tenants but highlights a mismatch between demand and supply, driven by the scarcity of qualified supply in central locations. Tenant interest in grade A properties is high, but the limited availability of superior quality product in central areas forces many law firms to accept grade B solutions to maintain a presence in locations deemed strategically indispensable.

This lack of qualified supply acts as a brake on the growth potential of the Roman market. Unlike Milan, where a continuous cycle of developments and refurbishments has progressively expanded the availability of high-quality spaces even in emerging districts, Rome suffers from a lower availability of adequate options, reducing the alternatives for tenants. The high rents in the €400-500/sq. m./year range reflect this pressure on a scarce supply, signalling an unmet demand that struggles to find adequate responses.

Legal sector tenants in Rome required even smaller spaces than in Milan: over 54% of operations involved areas under 500 sq. m. The contract type is exclusively lease, with no owner-occupier or pre-let activity.

The annual trend is declining, although this phenomenon can be attributed to a general drop in take-up in Rome and the persistent scarcity of qualified supply, which continues to be the main obstacle to the market's development.

The Public Administration is the most distinctive element of the Roman market, with a total take-up in the 2016-2025 decade of over 248,000 sq. m. distributed across 48 transactions. This sector, which accounts for 14% of total take-up in Rome compared to 2% in Milan, confirms the Capital's institutional vocation.

The concentration of Public Administration in Rome responds to the Capital's specific functional and regulatory needs. This concentration of governmental functions generates a structural and permanent demand for office space that uniquely characterizes the Roman market compared to any other Italian city. The need to maintain physical proximity between different state bodies to facilitate coordination, institutional interaction, and decision-making processes further consolidates this centralized geography.

The PA's locational strategy is predominantly centered on the Centre and CBD, which have absorbed nearly 130,000 sq. m. through 26 transactions. This concentration responds to the need to maintain operational synergies with other government institutions and optimize administrative processes. However, the growing scarcity of supply in central areas and the significant increase in rents are progressively changing the sector's locational dynamics. In fact, this situation is pushing some public bodies to evaluate more semi-central locations, even looking towards the EUR district, which is one of the few areas in Rome that offers qualified availability and connection to the metro line.

Public administration sector take-up, 2016 – 2025 - Rome

Transactions by the Roman Public Administration have been predominantly concentrated on grade B properties (68% of transactions), with a limited presence of grade A (30%). This distribution reflects both the limited availability of high-quality product and, as highlighted, the growing gap between the reference values of public entities and market rents. The average rental band is in the more contained range of €200-299/sq. m./year.

The dimensional requirements of the public sector are significantly larger than those of the private sectors analysed: 60% of transactions involved spaces larger than 2,000 sq. m., highlighting the structural nature of public demand, which must accommodate numerous offices and staff.

The contract type is mixed, with a prevalence of lease (80%) but also a significant share of owner-occupier (20%), the latter mainly relating to property purchases by public entities to stabilize their territorial presence.

The trend for the PA sector shows substantial stability in the long term, with annual fluctuations linked to public procurement cycles and budget availability. The average of the last five years (2021-2025) shows a slight decrease compared to the previous decade, possibly attributable to policies for rationalizing public spaces and the adoption of more flexible work models, even in the public sector.

The in-depth analysis of strategic sub-sectors in the Italian office market reveals complex dynamics that go beyond macro-sectoral aggregates.

Taking into consideration that the geography of demand responds to the specific functional logic of each sector. Three considerations emerge with particular clarity.

First, leverage the interplay between flexibility and quality. The fragmentation of occupier needs—services trending toward smaller, distributed offices; large corporations consolidating into sector hubs—requires more adaptable, high-quality assets. Those able to deliver office space that combines flexibility, sustainability, and alignment with sector operational models will be best placed to attract occupiers.

Second, upgrade assets to unlock untapped demand. It is clear that the availability and quality of real estate supply have become the key factor that actively shapes the geography of demand, rather than simply responding to it.
 

• In Milan, supply acts as a driver of development. The proactive development of new Grade A product in areas like CityLife and Porta Nuova has not only met existing demand but has actively created new hubs of attraction, redefining the locational strategies of entire sectors and offering occupiers a range of concrete quality options.
  
  
• In Rome, the dynamic is different: supply acts as a selective filter. The limited availability of modern supply in central areas requires occupiers to carefully evaluate their business priorities. The decision becomes a strategic balance: on one hand, prioritizing a central location to maximize proximity to stakeholders and institutions; on the other, choosing modern and well-connected submarkets to secure Grade A spaces that ensure the highest standards of efficiency, sustainability, and employee well-being.
   

Consequently, for real estate operators, the ability to refurbish and position supply has become a key lever to enable occupier growth strategies in both markets.

Third, align investment decisions with evolving definitions of 'core' location. As the boundaries of prime office districts shift, successful strategies will focus on assets and locations that balance physical quality, connectivity, and ecosystem integration—positioning portfolios for resilience and growth in a market shaped by both global and local sector trends.