EUROPE - Demand for office across Europe will fall by 10% over the next two decades as the working population declines and employers are forced to meet Generation Y's requirements for flexible office space, according to a report by Colliers International.
The report, which forecast a further 10% decline in demand from 2030 to 2050 based on available demographic data, identified some regional variations, including a 2.2% likely increase in the working population of northern Europe that could in theory drive marginal sub-regional growth.
Yet a reduction in migration to northern Europe as a result of weak short and medium-term economic growth prospects would likely mitigate this trend.
Eastern European markets expecting to benefit from global companies outsourcing will in turn benefit from the return of economic migrants.
However, these markets will also face the steepest decline in working population, not least because of lower life expectancy.
The report forecast a 10% drop in the working population of CEE markets, compared with 1.5% in northern Europe, 5% in Western Europe and 8% in southern Europe by 2030.
It also predicted generational shifts in the kind of office space occupiers will seek out, with demand for flexible working space outstripping that for rapidly obsolescent 'Baby Boomer' cellular offices and currently dominant 'Generation X' open-plan environments.
"With the Baby Boomer working population beginning to decline, other generations, particularly Generation Y, will start to have a stronger impact on the office space needs of occupiers," said the report.
Claiming employers would increasingly need to compete for a dwindling workforce, it predicted greater collective bargaining power - including greater involvement in decisions regarding workplace design - "sooner than population forecasts suggest".
Report author Damian Harrington, CEE director for research and consulting at Colliers, said investors would need to "future-proof" new developments to avoid high vacancies, increased obsolescence, lower rents and a weaker exit yield.
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