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Expensive Zurich Offices Lie Empty as Landlords Resist Rent Cuts

Commercial and residential properties stand on the city skyline in Zurich.

Commercial and residential properties stand on the city skyline in Zurich.

Photographer: Alessandro Della Bella/Bloomberg

Two floors of a prime lakeside office building in the heart of Zurich’s financial district remain empty six months after they were offered for lease. While that’s a cost for owner Zurich Insurance Group AG, slashing rents to attract tenants could be worse.

When asking rents are lowered, it can trigger a downgrade in the valuation of the properties on the owner’s books, potentially costing more than they may lose in rental income. For the insurers and other institutional investors that are among the biggest owners of Zurich office properties, that’s something to be avoided.