The professional property market in Luxembourg: opportunities and challenges for businesses in 2024

The commercial property market in Luxembourg has always been characterised by its stability and dynamism. As a major economic and financial centre in Europe, Luxembourg attracts not only local companies but also a large number of multinationals and international start-ups. The sector is particularly well developed in the areas of offices, commercial premises and warehouses, each of which meets specific needs in an ever-changing environment.

1.1 A robust economy and business-friendly environment

Luxembourg benefits from a robust economy, characterised by high GDP per capita and low unemployment, which creates a stable demand for business premises. This dynamism is fuelled by several key sectors, such as financial services, information technology, logistics and international trade. In addition, fast-growing companies, particularly in the e-commerce and fintech sectors, are seeking modern, flexible premises to meet their growing operational needs.

1.2 A resilient office market, but under pressure

The office market in Luxembourg is experiencing sustained demand, particularly in the capital, Luxembourg City. However, recent trends show increasing pressure on the office market. While the appeal of traditional offices remains strong in some areas, the COVID-19 pandemic has accelerated the trend towards teleworking and hybrid models, changing the demand for office space.

In 2024, businesses will increasingly look for flexible, modular office space that can meet the changing needs of their teams and working patterns. This flexibility is reflected in more diversified offerings such as coworking spaces and shared offices, which are experiencing significant growth.

2.1 The rise of coworking spaces and flexible offices

With changing working patterns, the office market in Luxembourg is changing. Companies, from large multinationals to start-ups, are increasingly turning to flexible workspaces. Coworking spaces have exploded in popularity in recent years, offering turnkey solutions especially for start-ups, freelancers and mobile workers.
Companies looking for a more flexible model for their employees and premises are turning to these flexible spaces, which allow them to rent offices on a short-term basis, have access to shared services such as meeting rooms or common areas, and thus reduce their fixed costs. These flexible spaces are also a response to economic uncertainty, allowing companies to adapt quickly to changing needs.

Sustainability is also becoming an important criterion in the choice of offices. Luxembourg and international companies are increasingly opting for certified green buildings, using sustainable materials and adopting technologies to reduce their carbon footprint. The Luxembourg government encourages companies to choose "green" offices and to adopt responsible practices through a policy of promoting low-carbon buildings.
Certifications such as BREEAM or LEED are becoming more common for new buildings, and companies looking for modern offices are increasingly incorporating these criteria into their leasing or purchasing decisions. As well as improving environmental performance, these buildings offer benefits in terms of energy efficiency, resource management and occupant wellbeing.

The retail property market in Luxembourg is also following some interesting trends, particularly with the rise of e-commerce. Retailers, while continuing their physical activity in the shopping streets of Luxembourg City and other major cities, are increasingly integrating online sales solutions into their commercial strategies.
This has led to a review of the requirements for retail premises. Retailers are now looking for smaller, flexible spaces, often close to major logistics centres, to speed up deliveries and make it easier to manage returns. 

Shopping areas around Luxembourg City, as well as peripheral areas with good transport links, remain highly sought after by retailers. Well-located shopping centres and retail units offer excellent visibility and easy access to consumers, making them strategic real estate assets.
The logistics sector in particular benefits from its proximity to major transport routes and European hubs. With its well-developed transport infrastructure (river ports, international airport and motorway networks), Luxembourg is a key location for companies wishing to develop their warehousing and distribution activities on a European scale.

4.1 Strong growth in demand for warehouses

The warehouse sector in Luxembourg is experiencing strong demand, particularly due to the growth of the e-commerce sector. Companies that distribute their products throughout Europe, especially those in the logistics sector, are looking for warehouses close to major transport routes in order to reduce delivery times and logistics costs.
Modern warehouses in Luxembourg, equipped with the latest technologies for inventory management and process automation, are becoming the preferred choice for companies looking to improve their operational efficiency. These facilities offer state-of-the-art logistics and are perfectly located for easy access to major European cities.

The impact of new technologies on the warehousing market in Luxembourg is particularly marked by the automation of processes. The integration of robots, automated warehouse management systems and supply chain optimisation software is transforming traditional warehouses into increasingly intelligent workspaces.
Companies seeking storage solutions are willing to invest in technologically advanced warehouses in order to remain competitive. This represents a new opportunity for property investors looking to meet the growing demand for warehouses adapted to new technologies.

Despite the continued growth of the business property market in Luxembourg, the shortage of quality space in the most sought-after areas remains a major challenge. Rental prices continue to rise in some popular areas, such as the centre of Luxembourg City and the well-developed suburbs. This can be an obstacle for companies, especially small and medium-sized enterprises (SMEs), which are looking to reduce their operating costs.

In the face of these challenges, the demand for flexible real estate solutions is growing. More and more companies are looking for short-term or flexible rental options, particularly in the office and warehouse sectors. Co-working spaces and turnkey solutions offer effective answers to this search for flexibility.

The business property market in Luxembourg offers numerous opportunities for companies looking to expand or establish themselves in a dynamic economic environment. Current trends such as the growing demand for flexible office space, the move towards sustainable buildings and the rise of the 'green economy' are all having an impact.