Race for quality office assets in major cities spurred by ESG and limited supply

Leading diversified professional services and investment management company Colliers reveals 67 percent of EMEA investors (and 60 percent of global investors) chose quality office assets in major markets as their top strategy picks. European cities like London, Paris, Berlin, and Munich have retained their allure and will be in high demand next year.

The appeal of offices not only stems from the realization that demand for this asset is here to stay, particularly in cities supported by strong transport infrastructure and high amenity values but also the ease of large-scale capital deployment that office assets represent. The rising cost of construction, viewed by 4 in 5 (81 percent) investors as a pain point, limiting new builds, renovations, and retrofit projects amplify the race to the core, and investors expect the stark imbalance between demand and supply will see core office values increase by up to, or more than 10 percent over the next 12 months.

“We are seeing increased pressure from investors on ESG issues, which in the core and core-plus segments have become one of the key selection criteria over the last 6 months. The lack of appropriate ESG credentials already affects not only the valuation of the property, but also the liquidity of real estate in the investment market - some funds are not allowed to acquire real estate that does not meet specific ESG requirements. We expect this trend to strengthen over the next 12 months,” Piotr Mirowski, Senior Partner, Head of Investment Services, said.

(WBJ)