In Kommalpha’s “Immobilienspezialfonds Quarterly” (Issue 5, April 2026) - a publication on expert topics in the field of specialized real estate funds - Sascha Schadly, Managing Director of KanAm Grund Group, analyzes the current developments in the European office property market and highlights the resulting opportunities for value‑add strategies.
The market is undergoing structural change: hybrid working models, rising ESG requirements, and shifting tenant needs are leading to increasing polarization. While high‑quality spaces in central locations remain strongly in demand, vacancy rates in secondary locations are rising significantly. At the same time, tenants are increasingly willing to pay above‑average rents for modern, sustainable office properties in prime locations.
These developments reinforce the “flight to quality.” Due to high construction costs, regulatory constraints, and limited financing options, the supply of new or high‑quality refurbished office space remains tight. This creates a favorable environment for value‑add strategies: the targeted acquisition and repositioning of existing buildings—through ESG optimization and modernization—can unlock significant value creation potential.
Three main factors are central to this: first, prime rents in many cities exceed the market average by more than 60 percent; second, ESG‑compliant buildings achieve rental premiums of about five to fifteen percent; and third, price discounts in the secondary office segment provide attractive entry points into the new market cycle.
According to Sascha Schadly, the transformation of existing office buildings is becoming a key driver of future value creation in the European market environment.
The full article is published in Kommalpha’s “Immobilienspezialfonds Quarterly” and can be viewed here.