Dr. Gleb Tsipursky – The Office Whisperer
Nirit Cohen – WorkFutures
Angela Howard – Culture Expert
Drew Jones – Design & Innovation
Jonathan Price – CRE & Flex Expert
More stories for you
LaSalle Investment Management, a subsidiary of global firm Jones Lang LaSalle, is strategically reducing its exposure to European office markets as it predicts that up to 30% of office space in the region may become “obsolete” in the near future.
According to a report published by Reuters, Philip La Pierre, head of LaSalle’s European operations, acknowledges the volatility in the commercial real estate sector but notes encouraging signs such as investors adapting to lower asset prices and a slowdown in redemption requests.
Despite the challenging environment, it’s reported that LaSalle aims to increase its overall European property acquisitions to $2 billion by 2024 — with a particular focus on the growth potential within real estate debt markets.
The decision comes at a time when changing dynamics in the workforce are severely impacting commercial real estate markets in metro areas around the world. In the U.S., there has been a significant shift in how office spaces are perceived and utilized — largely driven by the widespread adoption of remote and flexible work arrangements that emerged during the COVID-19 pandemic.
This shift has led to an increased vacancy rate in office spaces across major cities in the U.S., as companies reassess their need for physical office space and often opt for smaller footprints or more flexible lease terms to accommodate hybrid work models.
The city of Boston, for example, faces a cumulative revenue shortfall of $1.2 billion to $1.5 billion over the next five years — due in large part to the economic impact of the city’s empty office spaces.
According to a report published by The Wall Street Journal, as of the fourth quarter of 2023, a record 19.6% of office space in major U.S. cities remained unleased — surpassing previous highs from the 1980s and 1990s.
LaSalle’s decision to reduce its involvement in European office spaces, specifically, reflects a wary investment response to the changing nature of work and how the demand for traditional office spaces, in some investor’s eyes, are not expected to bounce back to pre-pandemic levels. As businesses increasingly adopt remote and flexible work arrangements, the need for physical office space may further diminish and lead to further oversupply in the market.
