A new research report from Oxford Economics highlights the continuing prevalence of remote working in Europe, particularly in northern cities, and explores its impact on the office real estate market. Analysing data up to 2023, the report finds that remote working has become a permanent feature of the European workforce, with notable differences across regions and cities.
According to the report, Northern European countries, including the UK, the Netherlands and the Nordic countries, have the highest percentage of employees working from home. Cities such as London, Stockholm and Amsterdam have the highest percentage of residents working from home, with London reaching 59 percent. Conversely, cities with strong manufacturing and hospitality industries, such as Athens and Milan, have a much lower percentage of employees working from home.
According to the briefing, the rise of hybrid work models is having a significant impact on office real estate markets across Europe. With fewer workers commuting to the office daily, demand for office space has fallen, vacancy rates have risen and office property values have fallen. However, the report notes that this trend is not uniform across all cities. For example, Madrid and Bucharest, which have low rates of telecommuting, are expected to see higher demand for office space due to a projected increase in office-based employment.
Interestingly, the report notes a growing disconnect in office demand between city centres and peripheral areas. City centres are seeing strong demand, especially those offering modern, energy-efficient buildings that comply with Environmental, Social and Governance (ESG) standards. These quality, centrally located offices are becoming increasingly popular as businesses strive to provide attractive working environments for their employees.
Despite the massive impact on office demand, the report shows no significant correlation was found between the rise in remote working and changes in productivity in major European cities, suggesting that while remote working may not reduce productivity, it is reshaping the physical footprint of workspaces.
The report concludes that as working from home takes hold, particularly in Nordic cities, the impact on office real estate continues to grow. While overall demand for office space may be sluggish, prime locations and modern buildings are bucking the trend, highlighting the ongoing changes in how and where people work in Europe.
