As the year comes to a close, it’s a fitting time to reflect on the commercial real estate market, particularly the office space sector, which has been my main focus. Throughout 2024, the office market remained relatively subdued. This was largely due to business uncertainty, which hindered relocation decisions, and the continued preference for remote work in many companies—often motivated by the desire to cut office-related costs.
It was common in 2024 for companies, after exploring the market, to ultimately decide to extend their lease at their current location for another year or two. This was encouraged by landlords’ strong willingness to retain tenants and prevent vacancy at lease expiry. In many cases, office spaces remain underutilized due to hybrid work policies, meaning that even with business growth, there is no urgent need to lease larger or new premises.
Often, the motivation to move was not expansion but downsizing—to reduce costs. The importance of cost optimization is further reflected in tenant movement driven by high ancillary costs in older buildings, prompting relocation to more energy-efficient premises. Even if the base rent of the new office is higher and overall savings are limited, tenants increasingly favor properties where rent forms a larger portion of total occupancy costs—typically indicating a newer building with better comfort and working conditions. There have been success stories in older buildings where investments in energy efficiency and workspace upgrades have enabled the leasing of long-vacant large areas—provided the building has timeless architecture and the flexibility to create a modern work environment.
New and recently completed office buildings still show vacancies, especially where large spaces are difficult to divide. However, since even major tenants now often want to move in just a few months after signing, buildings nearing completion tend to attract tenants more easily. Most new developments do eventually reach full occupancy.
What to Expect in the Coming Year
No major changes are expected in the first half of the year, as the broader economic environment isn’t yet supportive of a market rebound. Based on various economic forecasts, there is reason to hope that the second half of 2025 may bring a moderate increase in office market activity.
There will be choice for tenants: several new buildings have recently been completed or are nearing completion; quality spaces are becoming available in newer existing buildings; and more office projects are under construction or in the planning phase. This creates opportunities both for companies needing immediate relocation and those planning to move within the next 1–3 years. As no rapid upswing is expected, rent levels should remain stable and tenants will continue to enjoy a strong negotiating position. For those in need of upgraded workspace, 2025 presents a favorable window to secure a new office.
As for new developments, construction decisions still hinge on securing anchor tenants. Therefore, larger companies with a concrete interest should consider pre-leasing even in early-stage projects—these commitments are crucial to launching construction and determining the timeline for delivery.
