Swiss Commercial Property Remains a Source of Stable Income

When the United States signalled tariffs of up to 39 % on Swiss exports at the start of August 2025, the first concerns centred on the country’s manufacturing base. The final rate was reduced to 15 %, but the episode raised the prospect of lower margins, delayed investment and shifts in production for firms that rely on the US market. These companies operate mainly from industrial and logistics sites outside city centres, which explains why the shock did not spill over into the broader commercial property market. Office and retail vacancies in Zurich, Geneva and Basel remained low and asking rents in central locations barely moved. Urban commercial space is shaped by the service economy, domestic demand and population growth, not by swings in foreign trade policy.

A Macro Backdrop That Supports Income Stability

Inflation in Switzerland has remained well below international levels. According to the Swiss National Bank, consumer-price inflation averaged around 1,4 % in 2024 and moved even closer to the price-stability range in early 2025. This allowed the Swiss National Bank to cut interest rates several times after the tightening cycle of 2022 and 2023. Lower financing costs supported refinancing activity and eased pressure on real-estate owners.

Domestic demand also held up. SECO figures show that private consumption contributed about 1 percentage point to GDP growth in 2024. The labour market remained strong, and household purchasing power benefited from low inflation and a firm franc. Switzerland has added more than 12 % in households since 2015, driven by population growth, ageing and smaller household sizes. Each new household increases demand for local services and supports the tenants who occupy urban office and retail space. The Federal Statistical Office reported that the service sector expanded by 1,9 % in 2024, with health services, business support services, hospitality and education all showing growth. These sectors rely heavily on accessible, well-located space.

Hybrid Work Develops into Routine Rather Than Revolution

Predictions of a sustained collapse in office demand have not materialised. Mobility data offer a clearer picture than opinion polls. The Federal Office for Transport noted that weekday public-transport use in the Zurich region reached more than 90 % of its 2019 level in late 2024. Passenger statistics from Swiss Federal Railways showed similar patterns, with steady recovery in commuter flows across major cities.

FPRE surveys in 2024 and 2025 indicated that companies expect hybrid work to remain the norm, but few plan large reductions in space. Employers report that offices continue to serve as places for collaboration, onboarding and team cohesion. They increasingly focus on the quality of buildings, floorplan flexibility and access to amenities.

Rent levels reflect this resilience. According to Wüest Partner, median asking rents for office space in Switzerland rose from around CHF 210 per square metre in 2012 to roughly CHF 225 at the end of 2024. That increase of about 7 % matches cumulative inflation over the same period. The trend in Zurich was far stronger. Asking rents in central locations have climbed by roughly one third since 2012, supported by the concentration of high-value service firms and a lack of new development sites. Office vacancy in Zurich stood near 2 % in 2024, one of the lowest rates in Europe.

E-Commerce Levels Off and Physical Retail Retains Its Role

Online retail expanded rapidly during the pandemic, but recent years show a more moderate trajectory. The Swiss Post E-Commerce Report estimates that online sales accounted for about 12 % of Swiss retail turnover in 2024, up from just under 10 % in 2019. Growth has slowed sharply since 2021. Analysts at GfK point out that Swiss consumers value personal advice, immediacy and social interaction in many product categories. Older consumers, who command significant purchasing power, remain less digitally active.

Footfall data collected by mobility providers and retail groups indicate that city-centre visits recovered steadily in 2023 and 2024. Neighbourhood centres also benefited from increased local spending driven by household growth. Restaurants, cafés, pharmacies, personal-service providers and speciality shops remain anchored in physical locations. These segments require stable, accessible premises, which supports demand for retail space even as online channels grow.

Conversions Emerge from Pressure Zones

The segments under the most pressure are older office properties in secondary locations. Buildings constructed in the 1980s and 1990s often fall short of current standards for energy efficiency, ventilation and layout flexibility. They also face competition from modern developments near transport hubs. When achievable rents fall below sustainable levels, alternative uses become viable.

Housing scarcity is a decisive factor. National vacancy stands at around 1,2 %, with Zurich and Geneva below 0,5 %. In such conditions, residential rents exceed office rents by wide margins. Wüest Partner estimates that residential rents are 10 to 30 % higher than office rents in Zurich’s circles 3 to 8 and in parts of Geneva and Lausanne. Conversion costs can exceed CHF 5’000 per square metre and projects may take several years to complete. Yet the economics often make sense. Lower long-term vacancy, higher rent levels and improved market positioning can raise capital values well beyond the required investment. According to industry assessments, systematic conversions in major cities could create housing for more than 100’000 households.

Property advisers say that institutional owners increasingly consider conversions when technical upgrades coincide with market repositioning. For many, the attraction lies in aligning portfolios with clear long-term residential demand.

Prime Offices and Mixed-Use Concepts Maintain Their Appeal

At the top end of the market, demand remains firm. JLL’s Office Report for 2025 highlighted that central districts of Zurich, Geneva and Basel continue to absorb modern office space with regularity. Tenants prioritise quality, connectivity and flexibility. Many are prepared to pay premium rents for properties close to public transport, restaurants and services.

Mixed-use buildings continue to outperform because they respond to tenant preferences for convenience and interaction. In Zurich West, for example, properties that combine offices with retail and gastronomy have maintained low vacancy and stable rent growth. Market analysts note that these developments behave differently from monofunctional office blocks. Users view them as environments that support hybrid work patterns and employee engagement.

Private Investors Seek Predictable Income in Uncertain Markets

Private wealth has become an increasingly important source of capital in Swiss real estate. MSCI’s 2024 private-markets study indicated that high-net-worth individuals globally are raising their allocations to real assets. The reasons are diversification, inflation protection and the tangibility of the underlying assets. Swiss investors show similar preferences, supported by strong balance sheets and steady income growth.

Platforms that allow fractional investment have widened access to commercial property (ex: CapiWell). They emphasise transparency, stable income streams and a close link to the real economy. Many of the assets featured on such platforms are located in districts that benefit from demographic expansion, high service density and resilient tenant demand. As conversions, neighbourhood retail and high-quality offices reshape Swiss cities, private investors have more opportunities to participate in the market’s evolution.

A Resilient Asset Class in a Volatile Environment

The tariff episode of 2025 underlined how quickly external shocks can hit the Swiss economy. It also revealed how insulated the commercial property market is from foreign-policy turbulence. Urban offices and retail premises rely on domestic demographics, a strong service sector and structural scarcity, not on export cycles. Hybrid work and online retail have influenced demand but have not undermined the foundations of the market. Where segments face challenges, such as ageing office stock outside prime areas, conversions provide a credible path to renewed relevance.

For investors seeking reliable income, the conclusion is straightforward. Swiss commercial property continues to benefit from steady demand, prudent regulation and the specific structure of the Swiss economy. In an environment marked by uncertainty, few asset classes offer a similar combination of resilience, liquidity and consistent income.