The office sector was one of the most penalized in Portugal during 2023, with a total of 177 million euros invested, which represents the lowest amount of investment in the sector since 2013. This is what the WMarket 2023-2024 report, developed by Worx Real Estate Consultants, says.
In terms of occupancy activity, the office market recorded a total volume of 112,474 occupied sqm in Lisbon in 2023, reflecting a drop of 59% compared to 2022, a historic year in terms of demand. The average deal fell from 1,360 sqm in 2022 to 740 sqm in 2023, with only three transactions above 4,000 sqm.
The Expansion Area (zone 3) was the most sought-after, attracting more than 26,000 sqm (23% of the total area placed), followed by Parque das Nações (zone 5), which accounted for more than 24,000 sqm and 22% of the total demand.
The CBD zone proved to be the most resilient in the face of the general downturn in demand for office space, absorbing roughly the same area as the previous year, i.e. more than 18,000 sqm.
The TMT’s & Utilities sector remains the biggest driver of demand
According to Worx, the TMT’s & Utilities sector remained the biggest driver of demand, accounting for 24% of the area placed, followed by the Pharmaceuticals and Healthcare sector (15%), whose increase in demand was notable.
In this context, more than half of the transactions recorded relate to relocations, with the number of new companies in the Lisbon region falling by half. This dynamic was largely due to the difficulties experienced by IT companies in recruitment processes given the competitiveness of the job market.
In 2023, the completion of five office buildings represented an increase of more than 42,000 square meters of stock in Lisbon, which is much less than the new supply of 130,000 square meters completed in 2022.
12 projects are expected to be completed by 2024
This year, 12 projects are expected to be completed, amounting to around 150,000 sqm, with almost 60% of this area being pre-let, says the consultancy.
Taking into account the size of the spaces currently under negotiation, a strong dynamic in the level of occupancy is expected. This should contribute to a total annual volume of around 160,000 square meters in 2024, in line with the average of the last 10 years.
