To state the obvious and in contrast with 2019, the London ‘office’ market of 2020 until now is subdued.
The ability to act has been stifled due to the uncertainty that Covid has brought to tenants and occupiers. The rollout of the vaccination programme has brought some life back to the market but it still remains very low compared to the last five years.
As we know the construction industry has continued throughout the pandemic and new office space is completing each quarter, adding more Grade A supply to the market.
This presents an interesting dynamic; an influx of Grade A comes to the market leaving Grade B/second-hand stock looking less desirable and landlords are resorting to increased incentives to attract and keep their tenants.
Clearly the lack of certainty created by the pandemic has suspended decision making on the future of the office as a workspace. The purpose of the office and how it should be used has changed dramatically and is yet to be defined in the short and long term.
Our clients are asking us how they should proceed. We are putting the question back to them – how do they see their business evolving now and for the next five years? By knowing this, we can assess the impact on their office requirements:
We are seeing needs vary significantly across industry sectors.
For example, a mid-size international media company located in the West End has found that the creative synergies and productivity formed in their office space cannot be replaced by virtual collaboration and it is looking to increase its space by 30% to allow the majority of staff to return to the office safely.
In contrast, a global engineering plc is taking the decision to dispose of its 30,000sqft corporate office in the city which has been rendered superfluous during the pandemic. It is seeking a more cost effective and agile collaboration centre for its staff.
The shift in the market status presents an opportunity for occupiers to re-evaluate their needs and take advantage of the change in market norms.
Robyn Richards, Associate Director
Published: 12th February 2021