Office Market: Challenges and Signs of Revival

The global office market has been undergoing a period of transformation since the pandemic. The consolidation of hybrid work, the redefinition of corporate needs, and the pressure on obsolete assets have created significant challenges for investors and property owners. Nevertheless, some recent signs suggest that the sector may be entering a new phase of stabilization and repositioning.

The Structural Impact of the Pandemic

Between 2020 and 2023, the office sector experienced one of the largest corrections in its recent history. The widespread adoption of remote work reduced physical office occupancy and led many companies, particularly in the technology sector, to reduce their footprint or place space on the sublease market.

Cities highly dependent on technology companies, such as San Francisco, became a symbol of this transformation. During this period, vacancy rates reached historically high levels and several assets lost value.

However, the most critical phase now appears to be passing.

Portugal: A Resilient Market with International Demand

In Portugal, the office market has shown a distinct dynamic, with relatively low vacancy levels compared to other European cities. In Lisbon, the vacancy rate stood at around 8.3% in 2025, reflecting a relatively balanced market between supply and demand.

At the same time, around 63% of office take-up in early 2025 was generated by international companies, reinforcing the city’s position as a technology and services hub. Another relevant factor is the shortage of high-quality spaces. Only 15–20% of Lisbon’s office stock corresponds to Grade A buildings, creating opportunities for investment in refurbishment and new developments.

This trend aligns with the evolution of the global market: companies continue to seek office space, but with far more demanding requirements.

The Future of the Office Market

The clearest signals of this new phase in the market include:

• greater selectivity from occupiers

• demand concentrated in higher-quality assets

• growth driven by innovative sectors such as technology and artificial intelligence

• opportunities to create value through the refurbishment of existing assets

  
  

For investors and real estate managers, the challenge is no longer simply filling space. It is about repositioning assets to meet the needs of a new generation of users and evolving work models.