"Let us build new cities."
New Work. The trend towards the home office will turn the office markets upside down. Will city centres then become unattractive for investors? "We have to rethink", says Michael Reiss, managing partner of Sotheby's International Realty in Munich, "then this is a huge opportunity."
"In the Corona crisis, Germany manifests itself as a large-scale experimental space. We are moving at turbo speed from the 'normal office' to a hybrid, flexible and perhaps more sustainable working world," Michael Reiss analyses. This is a great challenge for real estate investors. "You ask yourself: Do investments in office space still make sense at all? And: What does the future of city centres actually look like in view of the discussions about city tolls, rent brakes, rural exodus and home offices?
In a recent study, management consultants KPMG took a close look at the topic of "The office of the future and the demand for space". Five scenarios were outlined - from "back to the office" to "permanent home office". The result: The truth will probably lie in the middle. The most likely scenario is a long-term increase in the home office options currently offered by larger companies to up to 40 percent in the next five years. Therefore, an increase in vacancy rates until 2022 is to be expected. Above all, however, the working world is modernising. In the future, the building will not only be a workplace, but also a place for meeting, exchange and networking.
"Of course, home offices will shake up the office property market," concludes Michael Reiss, "but we will find a new balance after the pandemic.
Even now, a kind of countermovement to the initial home office euphoria can be felt. Employers doubt the efficiency. See communication and creativity losses. And employees miss the social aspect of physical collaboration. "It's quite possible that the space requirement will therefore not decrease that much," assumes Reiss, "the square meters per workplace could increase, for example, because employers make their office space more attractive in the battle for talent. The office of the future is moving in the direction of a feel-good location - away from the metropolitan area and towards more movement and green spaces.
The consequences for investors are clear. "Quality and a first-class location remain in demand. Good returns can also be achieved there in the future."
The more exciting aspect for the real estate expert is what is now happening to the old, unattractive existing properties. "This can be a huge opportunity for urban development. We are currently nowhere near meeting the demand for affordable housing. In Munich, for example, there is hardly any space left for new housing developments. Die Conversion of office space that is no longer profitable into residential real estate could be the solution."
Michael Reiss suggests thinking big. "We should demolish old office buildings and plan quarters, look for new solutions in the structuring of living and working."
This could make the city centers really attractive again. Fresh. Modern. Sustainable. "If living and working are brought closer together, this also has ecological advantages - less traffic, less noise. The city centers become more lovable and liveable."
The Schwabinger Tor project is such a showpiece in Munich. 4.2 hectares, a hotel, 270 Wohnungen, 20000 square meters of office space. "A successful mixture of living, working and gastronomy. This is how I imagine modern togetherness in the city", Michael Reiss judges and concludes: "The real estate market will change. But that is precisely what offers opportunities. Sustainable, flexible concepts will offer investors very lucrative opportunities." ®
Munich | Sotheby's International Realty Michael Reiss; 49 (89) 744 24 18 90