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11 EDITORIAL BusinessToday is published every Thursday. The newspaper is a MediaToday publication and is distributed to all leading stationers, business and financial institutions and banks. MANAGING EDITOR: SAVIOUR BALZAN EDITOR: PAUL COCKS BusinessToday, MediaToday, Vjal ir-Rihan, San Gwann SGN9016, Malta Newsroom email: bt@mediatoday.com.mt Advertising: afarrugia@mediatoday.com.mt Telephone: 00356 21 382741 7.3.2024 R eal estate experts and business leaders speaking at a Malta Busi- ness Network event last January sounded the alarm over the glut of ex- isting office space. The situation is only expected to worsen as the supply of new office space continues to increase while de- mand is experiencing a slowdown. Part of that slowdown is the result of changed work patterns after the COVID pandemic. With homework- ing becoming a mainstay for many office workers during that two-year interlude, many workers requested to keep those arrangements after the pandemic. Some companies required less office space as a result, leading to a drop in demand. This situation has pushed office rental prices down with some real es- tate operators claiming these have re- duced by a fifth. This is not entirely bad, since commercial rents have been on the rise for a good part of the past decade. Indeed, what is happening now is a market correction, which will also serve to filter out the older properties that are not equipped with amenities that many office workers expect today. One can only hope that developers did their homework properly before embarking on massive projects that include offices as a key component. There are several large projects in the pipeline – DB's City Centre and An- ton Camilleri's Villa Rosa, both in St George's Bay, Paul Xuereb's PX Tow- er in Paceville, the Stivala Group's Townsquare in Sliema and the ST Tower in Ta' Xbiex, Malta Interna- tional Airport's Skyparks 2 – some of which are already being built, which will undoubtedly add to the pressure over the coming years unless demand picks up again. The consensus among panellists at the January event was that it is time to reassess the commercial property market in response to shifting dynam- ics. Indeed, last year, Smart City was among the first office space opera- tors to acknowledge the glut in office space when it embarked on a review of its masterplan. Smart City ditched plans for more office blocks on its grounds, citing "significant saturation" of office devel- opment in Malta. It was a reversal of the project's original idea to become a knowledge city in line with similar de- velopments in the United Arab Emir- ates. Now, the new Smart City masterplan allocates plots previously earmarked for information and communications technology (ICT) offices to other pur- poses like development related to ed- ucation and residential institutions. Smart City will be housing the new campus for the Institute of Tourism Studies and the American University of Malta. Admittedly, these two pro- jects were enabled by government in- tervention but if they do materialise they will be contributing directly and indirectly to the economy. Developers would do well to assess alternative options while their pro- jects are still on the drawing board. Other operators of older buildings may want to rethink their use and invest to bring them in line with the economy's current demands. While the government must not in- terfere in the market – after all in- vestors should have carried out a risk-reward analysis of their projects – it may want to realign its policies to encourage developers to re-imagine prospective office space into different productive spaces. The idea would be not to entirely lose the commercial space but instead re- use it for current and medium-term economic needs. Office glut requires re-imagination of commercial spaces In December 2023, the seasonally adjusted volume of retail trade decreased by 1.2% in the euro area and by 0.9% in the EU, compared with July 2023, according to estimates from Eurostat, the statistical office of the European Union. In July 2023, the retail trade volume decreased by 0.1% both in the euro area and in the EU. In August 2023 compared with August 2022, the calendar adjusted retail sales index decreased by 2.1% in the euro area and by 2.0% in the EU. In the euro area in August 2023, compared with July 2023, the volume of retail trade decreased by 3.0% for automotive fuels, by 1.2% for food, drinks and tobacco and by 0.9% for non-food products. In the EU, the volume of retail trade decreased by 2.4% for automotive fuels, by 0.9% for food, drinks and tobacco and by 0.6% for non-food products. Retail Price Volume DID U KNOW?

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