Demand and take-up

• There is a high latent demand for quality office space in Ljubljana, as the supply of quality space has been insufficient to meet the needs of the corporate base.
• A tenant survey indicated that 56% of occupiers in Ljubljana own their own office premises, and are therefore less able to relocate than those renting.
• Take-up during the years of the financial crisis was very low, only around 25,000 sqm per annum. 2018 saw a large increase thanks to improved sentiment, company growth and start-ups, at an estimated 100,000 sqm. Due to COVID-19 restrictions in 2020, take-up of office space in Ljubljana reached only 46,000 sqm, one third less than the previous year.

Supply

• Due to the relative immaturity of the office market, there is no historical data on the supply of office space in Ljubljana. According to GURS (Geodetic Administration of the Republic of Slovenia) estimates, the total area of office space in Ljubljana is 2.1 million sqm. The average age of office premises in Ljubljana is approximately 45 years. There is a lack of modern office premises with sufficient parking spaces, modern architecture and low operating costs.
• The only major new office building completed in 2019 was the 4,658 sqm Golden Palace in Stegne. A 2,000 sqm extension to Dunajska Residenca was available from September 2020. Mixed-use project Palais Schellenburg is currently under development in the city centre, which will bring 6,000 sqm of office space to market in 2022. Tobačna is promising, but years away. An office project will be developed in BTC, but is in the early stages and unlikely to deliver new space before 2024. Slovak company Corwin has announced the start of a new office building with 40,000 sqm GLA with completion in 2024.
• Availability of office space in Class A buildings has increased by 30% to 7,800 sqm. The total availability of office space in March 2021 has increased by 10%, to 122,000 sqm.

Rents

The current average asking monthly rent in Ljubljana is €11 per sqm per month, whilst the average achieved monthly rent in 2020 was €10.2 per sqm per month, excluding VAT. The submarkets of Bežigrad, City Centre, Moste, Šiška and Vič are stable and there has been little change in the past year. The more desirable submarkets in Ljubljana are Bežigrad, the City Centre, and BTC area as part of the Moste submarket.

The effects of the pandemic

It is certain that CVODI-19 will bring changes to the office market, but to what extent is not yet clear. Working from home was not common in Slovenia pre-COVID. Most companies now understand that it is possible to function with employees working remotely. Like most European countries, anecdotal evidence suggests that many office workers would like to carry on working from home some days. It should be noted however that the cost of residential real estate in Ljubljana is high, and many people live in cramped conditions. It is likely that we will see a shift to offices being used as social hubs for interaction with colleagues, and some workers choosing to work at home for part of the time.