Finely balanced investment markets – tighter regulation of the housing sector in sight

• Almost all of the evidence suggests that, for the next two to three years, office space will become even scarcer and correspondingly more expensive. Office occupiers would be well advised to prepare accordingly and develop strategies to deal with an even more acute supply shortage. Going forward, from 2020/21 the outlook is more unclear simply because we do not currently know how strong the growth in supply will be at that point. In addition, there are a number of factors (greater efficiency of space via co-working, slower urban growth and the ageing population) which are highly likely to result in slower growth in demand for office space, albeit this is almost impossible to quantify specifically owing to the complexity of the circumstances.
• While the demographic factors can still be projected relatively reliably and suggest slower yet continued growth in demand for office space in the top five cities, predicting future changes in office space usage per employee is far more challenging. Digitisation and co-working have the potential to cause significant disruption in this regard. Owners and investors should, therefore, pay particularly attention to these factors, since they could materially influence demand for space both in terms of quantity and quality.