Property investor LaSalle says 30% of European office space may be ‘obsolete’

LASALLE Investment Management is reducing its exposure to offices in Europe and believes between 20 per cent and 30 per cent of office space in the region could be “obsolete”, the firm’s head of Europe said on Tuesday (Mar 12).

“Is there redundant space in areas where it shouldn’t have been in the first place? I think maybe 20 to 30 per cent of office stock is probably obsolete,” Philip La Pierre, head of Europe at LaSalle, told Reuters at the MIPIM real estate conference in Cannes.

La Pierre said the commercial real estate market remained “fickle”, although there were signs that investors were slowing redemption requests and becoming used to lower prices.

“Everyone has to accept the fact that pricing is down 30 to 40 per cent and they might want to liquidate their position ... Now they’re willing to do it. But it takes a year or two psychologically to adapt to the fact that you’re making a loss,” he said.

Despite the tough conditions, LaSalle is targeting growing its overall property acquisitions in Europe to US$2 billion in 2024, up from US$1.8 billion last year, and sees growth opportunities in real estate debt, La Pierre said.

LaSalle is an independent part of global property services firm Jones Lang LaSalle. REUTERS