Things are looking bleak for office landlords. A new study by infinitSpace reveals a worrying trend: more than one in seven are facing a very real risk of shutting down their businesses within the next five years!
The Numbers Don’t Lie
The research paints a stark picture of the challenges landlords are facing. Here’s the breakdown:
- One in four (25%) landlords admit their office buildings aren’t even making a profit.
- A third (31%) are struggling to keep up with rising debt repayments.
- A fifth (20%) are unsure if they can even pay off their commercial property loans.
Inflation is a Major Headache
It’s no surprise that the current economic climate is making life tough for landlords. Nearly half (48%) say high inflation is making it impossible to manage the day-to-day costs of running their properties.
Desperate Measures
Some landlords are already taking drastic steps to stay afloat.
- One in six (17%) have either already sold or are planning to sell off office buildings to keep their heads above water.
- A fifth (20%) have been forced to cut jobs in the last two years.
A Glimpse of Hope?
Despite the dire situation, some landlords remain optimistic. Half (50%) believe their office portfolios will perform well in the next five years. But is this just wishful thinking?
The Way Forward
Wybo Wijnbergen, the CEO of infinitSpace, says it’s important to remember that while selling off buildings or making cuts might seem like a quick fix, it’s not a long-term solution.
He advises landlords to embrace a future-focused approach and consider converting underused properties into other types of real estate with the help of third-party providers. This, he believes, is the key to adapting to the rapidly changing world of work and securing a stable financial future.
The Bottom Line:
The future of the office market is uncertain, and the pressure on landlords is immense. Those who don’t adapt and take a proactive approach to managing their properties could find themselves on the losing side. It’s time for landlords to get creative, embrace new opportunities, and make sure their investments are ready for the future.