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The supply of available office space in the Geneva region increased by 7% to 184,000 sqm in Q3 2017, which equates to an availability rate of 5.4%. One reason for the increase is the building Route de Malagnou 105 in Chêne-Bougeries which is newly advertised for rent (around 9,000 sqm). The former occupier Addax Petroleum, a Chinese commodities company, confirmed in August its plans to completely close its Geneva operations.
In the CBD at the left bank of the river Rhône, office space availability decreased quarter-on-quarter from 32,500 sqm to slightly below 31,000 sqm, respectively to 4.8% of total stock. The available office space has been vacated, among others, by consolidation activities of financial institutions in recent years. With few prominent exceptions (Lombard Odier), the consolidation activities out of the CBD should largely be over by now. Demand for smaller A-class office spaces in the CBD is relatively dynamic. Landlords, however, have to refurbish the buildings and invest in the fit-out in order to attract tenants. Moreover, rent concessions in lease re-negotiations can still be substantial due to the adverse market rent development in recent years. The prime rent in the CBD decreased further to CHF 800/sqm year in Q3 2017. While there could be some further softening, prime rents are likely to find a bottom in the near future.
The situation is different at peripheral locations in the airport area or in Petit-Lancy. The rent levels are generally still high relative to comparable market areas in other Swiss cities. At the same time, current vacancies are already elevated and several better-located new office buildings will come on the market in the coming years. The new competition will put additional pressure particularly on older peripheral office buildings.
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14 November 2017