Overview of Study and Contributors
The study âHomeoffice and the Future of Offices: Flexibilisation, Reduction and Conversion Potentialâ is produced by the ifo Instituteâs Schnelldienst series. Authors Simon Krause, Andreas Trumpp, Tobias Dichtl, Susanne Kiese and Alexander Rutsch combine expertise from the ifo Institute and Colliers International Germany, bringing together academic research and marketâanalysis experience to assess how remoteâworking trends reshape office real estate across Europe.
Impact of HomeâOffice on Office Demand
Homeâoffice and hybrid work models have become entrenched beyond the pandemic. Approximately oneâquarter of the German workforce now works remotely, with the ifoâsurvey indicating a stable homeâoffice share of around 23â25 % in 2024. Companies are responding by shrinking office footprints; the study forecasts a longâterm decline of about 12 % in overall office space demand. In the seven largest German cities, this translates to a reduction of roughly 11.5 million m² of office area, though the effect materialises gradually due to existing lease structures.
Conversion Potential of Vacant Offices
The analysis highlights a significant conversion opportunity. In the topâseven German metropolitan areas, an estimated 5.8 million m² of office space could be repurposed in the medium term. Assuming a 30 % technical feasibility rate, about 1.7 million m² are suitable for residential conversion, potentially creating up to 60 200 new apartments and housing roughly 102 000 people. However, only a small fraction is economically viable, given high renovation costs and the need for adequate market rents.
Economic Assumptions and Investment Outlook
A detailed scenario evaluates a typical office building with 50 % occupancy at âŹ11/m² and 50 % structural vacancy. After accounting for a 20 % area loss during conversion, the target residential rent is âŹ17/m² (effective âŹ13.60/m²). The study calculates a conversion cost of about âŹ2 400 per m², placing many projects at the lower end of profitability. Investors therefore must weigh rent uplift against capital expenditure and financing conditions.
Broader Urban Implications
Beyond residential use, the report identifies alternative conversion pathways such as lifeâscience facilities (3â4 % of office stock), educational institutions, mixedâuse developments, and social services. Partial repurposingâe.g., groundâfloor retail, cafĂŠs, or coâworking spacesâcan enhance building vitality while preserving structural integrity. The authors stress that creative, multiâfunctional concepts are essential for the majority of obsolete office assets.
Market Trends and Future Outlook
Office vacancy rates in the seven cities have risen from about 3 % in 2019 to 6.7 % presently, with projections of up to 8 % in the coming years. Simultaneously, demand for sustainable housing continues to grow across Europe, making the conversion of underused office buildings a strategic lever for meeting climateâfriendly urban development goals. The study concludes that while the office market will not disappear, its evolution will hinge on flexible space design, intensified deskâsharing, and targeted conversion strategies that align with broader sustainability objectives.