Luxembourg office rents reach new highs, agency says

Office rentals have reached record prices in Luxembourg’s most sought-after addresses as the competition for the best locations and buildings intensify, real estate agency Cushman & Wakefield said on Tuesday.

Rents in the centre of the capital reached a record average of €54 per square metre per month in the second quarter of this year, the agency said in a report. Kirchberg is the second most expensive area at €42 per sqm per month, followed by the Cloche d’Or at around €37 per sqm.

Private equity firm CVC Capital Partners signed a lease for 3,000 sqm of office space at the Royal Park building on Boulevard Royal before the end of June, which drove the city centre’s average rental costs to a record, the report said.

“There’s a lack of quality buildings in the city centre at the moment,” said Cushman & Wakefield Partner Sébastien Bequet. “There is demand on the market and not always the adequate offering.”

Many companies are now looking for buildings with large communal areas to lure staff back to the workplace following pandemic lockdowns and months of working from home, Becquet said.

“Employers are trying to make staff happy to be at work so they are looking for more friendly areas and fewer individual spaces,” Becquet said.

Before Covid, having a comfortable pay package was at the forefront of most employees’ concerns. But things have changed. For some, working from home has meant no morning traffic, being able to do sports at lunchtime, or eating lunch on a comfortable sofa. These luxuries have become the new normal and have whizzed their way up to the top of workers’ priority list.

Some firms have set up a nap room, a video games room and an area where staff can go for a massage and have beauty treatments done, real estate experts said in February. Rents in areas outside the capital are also increasing, the report said. Rents there could reach a record of €26 per sqm per month.