Office Vacancy Rates Rise in Swiss Cities

Empty desks are piling up across the nation’s economic powerhouses. A startling new study by real estate heavyweight Jones Lang LaSalle AG (JLL) reveals that vacant office space in Switzerland’s five largest markets—Zurich, Geneva, Bern, Basel, and Lausanne—surged by a significant 9% in 2024. This isn't a sudden blip; it is the continuation of a relentless upward trend in supply availability that has been climbing steadily since 2019, the dawn of the remote work revolution.

The data paints a clear picture of a market in transition. While the Swiss economy remains robust, the physical footprint of business is shrinking relative to supply. The sheer volume of empty space has swelled by 231,000 square metres since 2020, forcing landlords to confront a new reality. We are witnessing a fundamental shift in how Swiss companies utilize space, and the numbers confirm that the traditional office model is grappling with persistent headwinds.

Despite the hollow echoes in existing halls, cranes continue to dominate the skyline. It is a striking paradox: while vacancy rates climb, the concrete keeps pouring. Between 2020 and 2024, a staggering 1.16 million square metres of new office space were unleashed onto the Swiss market. While construction activity peaked in 2020 and saw a subsequent decline, the lull is over. JLL experts project that the volume of new builds between 2025 and 2027 will surpass 2024 levels, driving office stock up by an average of 1% annually.

However, this growth is not uniform. A sharp regional divergence is emerging. Developers are doubling down on Geneva and Bern, where significantly more space is slated for construction. In contrast, Zurich and Basel are expected to see a cooling in development by 2027. This aggressive building strategy in the face of rising vacancies suggests developers are betting on future growth, even as the current market struggles to absorb existing inventory.

Location is no longer just a factor; it is the verdict. The market is becoming ruthless towards obsolescence. Modern, flexible, and sustainable offices with prime connections are still in high demand, defying the broader downturn. Tenants are not just looking for space; they are hunting for quality. The JLL study highlights a critical divide: older buildings, particularly those without a train station within walking distance, are becoming increasingly difficult to let.

This "flight to quality" means the vacancy crisis is largely a crisis of the outdated. Companies are leveraging the softer market to upgrade to premium, energy-efficient spaces that attract talent. Consequently, the limited supply of top-tier locations does not reflect the overall vacancy statistics. Landlords holding aging assets in peripheral locations face a stark ultimatum: modernize or face permanent vacancy.

While the Swiss market grapples with surplus, it stands as a fortress of stability compared to its European neighbors. The 9% increase in vacancy, though significant domestically, is comparatively low from an international perspective. Across the border, the situation is far more volatile. In the same period, the average vacancy rate across 24 major European cities spiked by 3.3 percentage points to hit 8.5%.

Switzerland’s resilience is underpinned by its robust economic fundamentals. Employment growth continues to support demand, preventing the market from sliding into a crisis. The demand for office space remains "intact," according to the study authors. While flexible workplace concepts introduce uncertainty regarding future space requirements, the Swiss economy's engine is strong enough to keep the sector grounded, even as other European capitals face steeper challenges.

Fear is receding, and capital is ready to move. Despite the headwinds, a confident market is emerging, fueled by a favorable low-interest-rate environment. Jan Eckert, head of Switzerland and capital markets at JLL, delivers a bullish forecast, stating, "The short-term prospects are more favourable than they have been for three years."

This isn't just optimism; it's backed by activity. Eckert notes a tangible shift in both the "quantity and quality of incoming bids." Investors, previously paralyzed by caution, are re-entering the arena. While they remain watchful of the shifting workplace dynamics, the combination of Switzerland’s economic health and better financing conditions is unlocking the market. The message for 2025 is clear: the Swiss office sector is bending, but it is far from breaking.