What are the biggest challenges and threats to the office rental market in the future and how to prepare for them?

Changing work model

One of the biggest challenges for the office rental market is the change in work patterns, which has been accelerated by the COVID-19 pandemic. More and more companies are choosing to introduce or increase the flexibility of remote, hybrid, or rotational work, which is affecting the demand for office space. According to CBRE's 2020 report, 86% of companies plan to reduce or change their office portfolio in the next three years. This means that office landlords must adapt their offerings to meet new customer needs, such as shorter contracts, smaller spaces, greater flexibility and better financial terms.

Increased competition

The change in the working model is also associated with increased competition in the office rental market. In addition to traditional offices, landlords have to compete with other forms of work, such as coworking, serviced offices, virtual offices and home offices. These alternatives offer clients more freedom, lower costs and a better fit for their individual preferences. According to JLL's 2020 report, coworking's share of the office rental market increased from 5% in 2019 to 9% in 2020. To meet this competition, office landlords need to improve the quality and attractiveness of their facilities, offer additional services and amenities, and create a strong brand and customer loyalty.

Technological changes

Another challenge for the office rental market is technological changes that affect the way we work and communicate. New technologies such as artificial intelligence, the internet of things, cloud computing and blockchain are creating new opportunities and requirements for employees and companies. Office landlords need to stay abreast of these trends and ensure that their clients have access to modern technological solutions that will improve their productivity, security and comfort. Some examples of such solutions are smart building management systems, mobile apps for booking workspaces or meeting rooms, online collaboration platforms or solutions based on artificial intelligence.

Environmental changes

A recent challenge for the office rental market is environmental changes, which are becoming an increasingly important decision factor for clients. More and more companies are adopting sustainability strategies and betting on green and socially responsible operations. Office landlords must therefore pay attention to the environmental aspects of their facilities, such as energy efficiency, use of renewable energy sources, reduction of greenhouse gas emissions, waste management or attention to employee health and well-being. According to a 2020 Colliers report, 72% of companies consider environmental certifications an important or very important criterion for office selection.

How to prepare?

To meet these challenges and threats, office landlords need to be flexible, innovative, and proactive. Here are some tips on how to prepare for the future of the office rental market:

- Monitor trends and customer needs and adjust your offerings accordingly. Offer shorter contracts, smaller spaces, more flexibility, and better financial terms. Offer hybrid solutions that allow clients to use different work arrangements. Create a strong brand and customer loyalty by offering additional services and amenities.
- Invest in the quality and attractiveness of your facilities. Ensure a high technical, aesthetic, and functional standard for your offices. Apply new technologies that will improve efficiency, safety, and comfort for customers. Increase the visual and architectural attractiveness of your buildings.
- Pay attention to the environmental aspects of your facilities. Apply green and energy-saving solutions that will reduce the negative impact on the environment and lower operating costs. Obtain environmental certifications that confirm the sustainability of your offices. Take care of the health and well-being of your employees by ensuring proper lighting, ventilation, acoustics, or ergonomics.

The office rental market is one of the most dynamic and competitive segments of the commercial real estate market. In the face of changing customer needs and expectations, office landlords must be flexible, innovative, and proactive to maintain their position and advantage in the market. In this article, we have outlined the biggest challenges and threats that office landlords may face in the future and suggested ways to prepare for them.