Office buildings in Europe are facing greater obsolescence and depreciation than ever before.

According to Jones Lang LaSalle's Offices 2020 Research Program, European office buildings will suffer an elevated risk of value depreciation and obsolescence over the next decade as three structural variables combine to accelerate risk. Loft

Due to increased sustainability regulation, growing workplace technology, and altering employer requirements, the rate of increase in office obsolescence, where the building is no longer appealing or fit for use, will accelerate.

As a result, a large amount of office equipment will degrade in value and be converted to other purposes. In 2011, 160,000 sq m of office space over 1,000 sq m was taken up in Amsterdam, while approximately 93,000 sq m of office space was given other uses such as hotels and residences. In Birmingham, above 1,000 square meter take-up totalled 31,100 square meters in 2011. In comparison, 50,000 square meters were set aside for other applications. As policy and technology advance, this trend will become more pronounced.

Jones Lang LaSalle's Bill Page, Head of EMEA Offices Research, stated, "The majority of office buildings in Europe are ancient. In Germany, for example, 59 percent of non-residential construction dates from the 1950s to the 1990s. In the United Kingdom, 22% of commercial building stock was built before 1960, whereas two-thirds of office stock in Paris is over 20 years old. To ensure that old buildings are fit for purpose, they will require even more investment and upkeep. This entails a higher level of danger."

Aside from the high volume of adaptation for alternative uses, Western Europe's current low rates of office replacement, ranging between 1% and 3%, mean that as stock ages, investors and occupiers are under more pressure to future-proof current assets and protect rental income, reduce voids, and attract companies willing to take space in the building. This is made more difficult by a lack of capital expenditure and a product that will effectively be controlled by banks for the foreseeable future.

Benoît du Passage, Managing Director of Jones Lang LaSalle in France and Southern Europe, tells World Property Channel, "While depreciation and obsolescence are not new to the real estate industry, they have a greater impact on offices than on any other commercial sector. Keeping up with the competition is a never-ending challenge. Anecdotal data suggests that investors in France are already factoring in the expense of bringing buildings up to the environmental standards mandated by Grenelle II. This will have an impact on property values, particularly secondary products that may demand a larger financial commitment."

Page continued by saying, "Office buildings are time-consuming construction projects that might take years to complete from the architect's idea to the finished result. However, the industrial and corporate occupier demands are changing at a faster rate. Employees demand a comfortable work environment, while companies demand flexible facilities that satisfy growing environmental and technology demands. Buildings that do not meet the legal criteria and are unfit for their intended use will be repurposed or, in extreme cases, demolished."