Commercial real estate market Canton of Basel-Stadt: What chances and perspectives does the economic location offer for real estate investors?
On 29 September 2016, the Economic Development Unit of the Canton of Basel-Stadt invited companies from the real estate industry, in order to show the excellent chances and perspectives of the commercial real estate market for investments. In the presence of 80 guests, Christoph Brutschin, Eva Herzog, and Hans-Peter Wessels introduced the interplay of the location quality, the active land policy, and the land use planning, as well as the resulting chances on the commercial real estate market.
The demand is increasing more than the supply - the Basel economy needs new commercial real estate
In the Canton of Basel-Stadt, there has been a surplus of demand for commercial real estate for several years. Since 2011, there have been less vacant industrial and business premises every year. Since then, the vacancy rate has declined by nearly half, from 170,000 m2 to barely 90,000 m2. In particular, the vacancy rate for office zones has sunk strongly, and for companies it is increasingly difficult to find offices for settlement or expansion. This is also confirmed by a survey of the offer quota (advertised office zones in the next six months), which for instance is done by CSL Immobilien. National as well as international comparison confirms that the companies in Basel depend on additional offers.
A look at the demand shows a further chance which the commercial real estate market in Basel offers. The successful growth of large Basel companies such as Roche and Novartis leads to downstream effects. A study of the advising company Polynomics, for example, shows that one additional job in the pharmaceutical industry in Switzerland generates more than three extra jobs with suppliers in upstream industries - part of it in Basel. The numerous extension projects that are in planning, construction, or already completed thus unleash further demand in upstream industries and so strengthen the demand in the commercial real estate market.
The favourable perspective regarding the development of the location’s quality presents a third chance for investors. Private companies and the public sector are investing around seven billion in the innovation system of the Basel region and thereby making important future investments to strengthening the adaptability of the economic location. A short overview with exciting indicators and insights of the Economic Development Unit in the commercial real estate market can be found in the annual factsheet "Investitionschance Geschäftsimmobilien Kanton Basel-Stadt" (Investment opportunity commercial real estate Canton of Basel-Stadt – in German only). The Locational Quality Indicator of Credit Suisse confirms the good prospects of the location. According to a recalculation based on the accessibility as well as the tax burden for legal entities based on the third series of corporate tax reforms, the Canton of Basel-Stadt may well be developing into the canton with the second-most attractive location of all Swiss cantons by 2020.
The active land policy of the Canton of Basel-Stadt
The Canton of Basel-Stadt actively participates in the real estate market and could recently acquire diverse areas, for example the Coop-Lysbüchel and Rosental sites. In addition, the sale of another 50,000 m2 of surface for the strengthening of the economic location is planned on the Klybeck site. The Cantonal Government specifically disposes of land with building rights, in order to promote the development of the canton as an economic location as well as living space. With the disposing of building rights, strategic goals of the canton can be actively promoted. In this way for example, project developers were invited to a competition by way of tender to develop a new business park for the site on the Neudorfstrasse. This allows for more zones for the producing industry and at the same time increases the scope of action for the building densification in other sites. The Rosental and Klybeck sites make it possible for the canton to specifically strengthen the rental market for commercial real estate in order to sustainably improve the availability of attractive zones for companies in the future.
Economic growth thanks to densification –site developments in Basel
In the spatially limited Canton of Basel-Stadt, there is a large demand for apartments and commercial real estate. This is evidenced by the increase of about 10,000 inhabitants and 20,000 employees over the past ten years. The Cantonal Government is pursuing the goal of continuing the growth strategy with the population and the economy. The basis for the further growth is the building densification. Land use planning offers existing companies with development plans the possibility to expand on company-owned sites. Roche, Novartis, Syngenta, Helvetia, Bâloise, BIZ, Bell, and Lonza are using this opportunity and are investing large sums in their real estate. The list is not concluding and is continually growing. In order for the scope of action to likewise expand for settlements and companies without their own sites, economic zones are designated in densifications. For the strengthening of the rental market, the most important economic focus areas are the sites of Dreispitz, Güterbahnhof Wolf, Klybeck, Rosental and Volta Nord. According to the current status of planning, there is zone potential for about 26,000 new jobs and 16,000 inhabitants by the year 2035.
The perspectives for considerable economic growth are currently favourable. The Economic Development Unit of the Canton of Basel-Stadt is available to advise companies searching for zones as well as investors who would like to invest in the commercial real estate market of the Canton of Basel-Stadt. We look forward to hearing from you.