Switzerland office market 2025

Zurich, 7^th January 2025 – Jones Lang LaSalle (JLL) has published a new study on the office market in Switzerland. The report provides a comprehensive insight into the office space markets Zurich, Geneva, Bern, Lausanne, Basel and Zug. In addition to the key figures and changes in the largest Swiss market areas, the office market study also includes analyses of the availability of ESG-compliant office space and an overview of current developments and trends in Europe.

In the five largest office markets in Switzerland – Zurich, Geneva, Bern, Basel and Lausanne (CH5) – the supply of available office space increased by 9 % compared to the previous year, totaling 995,500 m² at the end of 2024. This means that the amount of obtainable office space has increased almost continuously in recent years. Since the end of 2019, when home offices still had a shadowy existence in many places, the average supply ratio in the five largest Swiss office markets rose from 4.1 % to 5.0 % at the end of 2024 (+0.9 %). However, this increase is put into perspective when compared internationally, as the average vacancy rate in 24 European cities rose from 5.2 % to 8.5 % (+3.3 %) in the same period.

Considering the 1.16 million m² of new office space completed since 2020, the increase in supply of 231,000 m² measured in the same period is moderate. Construction activity reached a peak in 2020 with around 343,000 m² of newly created office space and then fell steadily to 57,000 m² in 2024. The trough has therefore been passed and volumes will rise again annually between 2025 and 2027.

There are considerable differences between the various market regions though: measured against the current stock, Geneva recorded the highest growth between 2019 and 2024 (Ø 2.0 % of the stock), with the expansion in space set to be even stronger by 2027 (Ø 2.3 % of the stock). In Bern, construction activity is increasing significantly compared to the past, but future growth will only be slightly above the Swiss average at a mean value of 1.1 % per year. Conversely, an average of 71 % and 58 % less new office space will be completed in Zurich and Basel by 2027 compared to the period from 2019 to 2024. For the five largest markets the office stock will grow by an average of 1.0 % per year until 2027, which is 26 % less than in the recent past.

Overall, the demand for space is intact. However, finding tenants for vacant space in older buildings without a railway station within walking distance remains a challenge. On the other hand, the market is absorbing modern, flexibly usable and ideally ESG-compliant office space with good connectivity comparatively quickly. This is reflected not least in the limited supply in these locations.

In Zurich's District 1, 3.0 % of office space is available, in Lausanne's CBD 1.5 % and in Bern's city center only 0.4 %. Available office space is also scarce in the cities of Lucerne (1.3 %), Zug (1.7 %), Fribourg (2.0 %) and Lugano (2.1 %). At 3.9 %, Geneva's CBD offers a more extensive supply. As much as 9.2 % of space is vacant in the city center of Basel.

The prospects for office property in Switzerland are ambivalent. On the one hand, vacancy rates have recently risen slightly, and investors are still cautious because future space requirements are uncertain due to more flexible workplace concepts. On the other hand, robust economic and employment growth is supporting demand and the Swiss office market has proven to be highly resilient. In addition, rents are protected against inflation and, in contrast to the rental property market, the risk of political market intervention in the commercial sector is limited.

Many funds and investment foundations carried out capital increases in the second half of 2024 and will start the new year with full wallets. Their investment focus is likely to be on core properties which are located in the catchment area of urban centers, do not require refurbishment and, in the best case, meet the required sustainability criteria. In recent weeks, a higher willingness to pay coupled with a fundamentally broader interest has been noticeable. This and the lower interest rate environment should lead to yield compression and higher transaction volumes this year.

Jan Eckert, CEO Switzerland & Capital Markets Lead Germany/Austria/Switzerland at JLL: „Many market players are optimistic about the coming months and want to take advantage of the improved investment environment for transactions. We are noticing this trend in both the quantity and quality of incoming bids. The short-term prospects are more favorable than they have been for three years.”

More information on major construction projects, leases and corporate site selection decisions in the respective economic areas is included in the study, which was dispatched together with this media release. It is also obtainable via the following link (as of 8^th January 2025): https://www.jll.ch/en/trends-and-insights/research/switzerland-office-market