Home working biggest threat to gateway office markets – The Property Chronicle
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Home working biggest threat to gateway office markets

The Professor

Post-Covid work patterns will have a significant effect going forward in Europe.

During the Covid-19 lockdowns, the share of office employees working some time or usually from home more than doubled, from 28% in 2018 to 67% in July 2020 across the EU’s 27 countries (source: Eurofound). Of course, this increase has not gone unnoticed, as newspaper headlines emerged to debate the future of the office.

To add to this ongoing debate, we attempt to quantify the possible impact of home working across 25 European office markets using five key variables that reflect on different elements of the demand and supply equation. This will allow us to determine how resilient each market is to these expected changes from working from home (WFH).

“We expect the office stock to grow by an average of only 1.1% across our 25 markets over the next five years”

First of all, we consider traffic congestion data to derive a local market impact from home working (source: IRIX). During the lockdowns, congestion declined by 51% on average and we assume that when lockdowns are lifted, city congestion levels will return to normal. In the future, we assume that office employees in cities that have a higher congestion rate have more incentives to increase their home working than elsewhere. We take this estimate together with the reduction in office space per employee over time (reduction from 19sqm in 2003 to around 16sqm in 2019 on average in Europe) and the forecasts of office using employment.

Based on this, we can derive a city level office employment growth estimate while controlling for the future increase in home working for each city. 






The Professor

About Dennis Schoenmaker and Hans Vrensen

Dr Dennis Schoenmaker is Associate Director, Investment Research and Strategy, at AEW; he was previously a global real estate economist at CBRE, after completing his PhD in real estate at the University of Groningen. Hans Vrensen is Head of Research and Strategy at AEW Europe; his previous roles include Head of CMBS Research at Barclays Capital and Global Head of Research at DTZ (C&W).

Articles by Dennis Schoenmaker and Hans Vrensen

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