News release

Luxembourg Office Market Report 2023

Another difficult year before the recovery ?

January 25, 2024

Pierre-Paul Verelst

Head of Research Belux
+352 46 45 40

Emna Rekik

Country Lead & Head of Markets Luxembourg
+352 46 45 40 43

Vincent Van Brée

Head of Capital Markets Belux
+352 46 45 40

Valina Sempot *vsmc bv/srl

Head of Marketing & Communication, Research & Data Knowledge Belux
+32 (0)2 550 25 37

French Press Release

The year 2023 was marked by an unusually weak performance in the Luxembourg office market, forcing landlords to reinvent themselves and adapt to ESG challenges.

Occupancy levels declined significantly, with decision-making processes being slow, resulting in many transactions being postponed to subsequent years.

Key figures from 2023 show a 17% drop in office occupancy, totaling nearly 176,000 square meters. The number of transactions also decreased by 31%, reaching only 172 deals.

Despite the overall decline, there were some notable acquisitions, such as KPMG occupying 31,000 square meters in the Kronos project and the European Parliament taking over the Konrad Adenauer building. However, these transactions were planned well in advance and do not fully represent the market conditions in 2023.

One of the major takeaways from the year is the success of new properties and ongoing projects. About 66% of office occupancy consists of properties less than 5 years old, compared to 60% in 2022. Sustainability criteria and carbon neutrality have become essential considerations, and this trend is expected to continue in the future.

The availability of office spaces increased in Luxembourg due to several speculative deliveries, elevating the vacancy rate from 3.5% to 4.2%. Although most deliveries in the city center were already pre-leased, the peripheral districts and Esch/Belval experienced a significant rise in vacancy rates, reaching over 8%. Forecasts for 2024 suggest a further increase in availability, mainly due to speculative deliveries estimated at over 45,000 square meters.

Rents have been influenced by rising construction costs and the scarcity of new properties. In some districts, rents increased modestly, with the Central Business District seeing a 1.8% rise, the Gare district witnessing a 5.3% increase, and the Cloche d'Or district experiencing a 2.8% hike. Other districts remained stable. The highest increase was observed in the Findel Airport district, with a 6.7% inflation rate.

In terms of investment, 2023 saw a significant decline compared to the previous years. The transaction volume reached a meager €531 million, a 39% decrease from the previous year. A notable trend was the dominance of acquisitions for own use, constituting around 80% of the transactions. Transactions by institutional investors were notably low, likely due to increased financing costs and a shift towards other investment options.

However, there is optimism for the investment market in 2024. Inflation is expected to be under control, and the European Central Bank has announced potential interest rate cuts. This could stimulate both private and institutional investors to seize attractively priced opportunities in the market. A recovery is anticipated in terms of transaction volumes and yields, with an upward trend expected in the second half of the year.

In conclusion, 2023 was a challenging year for the Luxembourg office market, characterized by weak occupancy levels and reduced investment activity. However, there are indications that conditions may improve in 2024, with the gradual return of employees to the office and potential interest rate cuts stimulating investor confidence. The market continues to prioritize sustainability and new properties, indicating a shift in occupiers' preferences.

French Press Release

About JLL

For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with annual revenue of $20.8 billion and operations in over 80 countries around the world, our more than 106,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit