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The Geneva office market is undergoing a medium-term transformation. New, well-situated subcentres are putting a few incumbent office-building sites under pressure. From a cyclical perspective, the overall Geneva market remains challenging as well, but there are initial signs of a stabilisation in the central business district. The supply of available office space in the Geneva region expanded by 6.2% YoY to 186,000 m² in Q4 2017, which equates to an availability rate of 5.5%. The supply of available space on the left bank of the Rhone in the CBD has edged downward back below 30,000 m², which works out to an availability rate of 4.5%.
Moves undertaken by financial institutions to consolidate mid-and back-office jobs in new, modern office buildings outside the CBD have been completed for the most part. Demand for smaller Class A office-space units in the CBD is relatively dynamic, but landlords have to renovate the space and invest in fit-outs. Moreover, when it comes time to renew leases, rent adjustments to prevailing market rates can still be sizable in some cases. The prime rent price in Geneva’s CBD retreated again last year and currently stands at CHF 800/m² per annum. Although a further mild dip cannot be ruled out, prime rents are likely to slowly find a floor.
The picture looks different in peripheral locations in the airport region and in Petit-Lancy. The rent price level in those areas remains relatively high in Switzerland-wide comparison. At the same time, though, those submarkets already exhibit elevated vacancy rates today. Moreover, major new building developments in better-situated locations will be coming onto the market in the years ahead. The new competition will put additional pressure particularly on older office buildings on Geneva’s periphery.
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05 February 2018