KfW Research: Municipalities need more office space

• Almost one in four German municipalities need more work space than just a few years ago
• Dismal condition of administrative buildings potentially hinders recruitment
• 72% of municipalities see investment backlog in energy upgrades in their administrative buildings

Many private sector offices in Germany are unoccupied since working from home has greatly reduced businesses’ need for work space. The situation is very different in municipalities. Almost one in four (23%) of the German municipalities surveyed by KfW Research and the German Institute for Urban Affairs reported greater work space requirements than just a few years ago. Only 8% observed that they needed slightly less space, while 21% of municipalities believe that they will need more office space in the coming years. Only 14% expect to require less work space.

These were the findings of a special analysis of the Municipal Panel, which is published annually by KfW Research and the German Institute for Urban Affairs. “Municipalities are having to take on more and more tasks. This has led to a significant expansion of their workforce in recent years, so that their space requirements have grown”, said Dr Fritzi Köhler-Geib, Chief Economist of KfW. Studies have shown that public servants work from home roughly as often as workers in the private sector.

Many municipalities anticipate further workforce growth in the future. They also worry that the desolate condition of many administrative buildings may deter potential job applicants. Among the municipalities surveyed, 75% agreed with the statement that the condition of buildings influences the productivity and motivation of the workforce. Likewise, 67% believe that it correlates with their ability to attract new workers.

“In times of skilled labour shortages, these factors also play a relevant role in attracting qualified workers to the public service in cities, municipalities and rural districts”,

said Dr Fritzi Köhler-Geib.

However, 68% of municipalities surveyed noted that the condition of administrative buildings had only little or no political priority. They tend to focus their investment activity on child daycare centres, schools and roads. The result: 72% of municipalities see a serious or significant investment backlog in energy upgrades in administrative buildings.

“Modernising the municipal building stock is relevant from an ecological perspective, too. Implementing energy upgrades in buildings unlocks great potential for saving energy and reducing carbon emissions”,

said Dr Fritzi Köhler-Geib.

The study can be downloaded from Focus on Economics | KfW.

The survey for the KfW Municipal Panel 2024 was conducted among municipalities with more than 2,000 inhabitants in Germany in the months of September to November 2023. The survey was responded to by 799 municipalities, a response rate of 28%. The findings are representative of German municipalities with more than 2,000 inhabitants.