A major property investor, LaSalle Investment Management, is reducing its European office holdings. Their reasoning? They believe a significant portion, between 20% and 30%, of current office space in Europe could become obsolete.
“Is there redundant space in areas where it shouldn’t have been in the first place? I think maybe 20 to 30% 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% 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.