Latest figures published reveal that office space is being acquired and re-occupied at a quickening pace, especially in the capital.
Figures published by CBRE confirm that the amount of central London office space under offer in August 2021 not only reached the highest monthly figure since the start of the pandemic but was also above the 10-year monthly average.
Under-offers exceeded their long-term average levels in the City, West End and Southbank. Demand for prime assets remains strong, with overseas buyers maintaining an active presence, accounting for over 75% of deal volumes. The post-lockdown realisation that many office-based workers desire a shared environment in which they can at least choose to work has taken hold and is gathering momentum.
The pre-Covid assumption that the majority will work in the office most of the time was rapidly dispelled amid health concerns. An increased acceptance of the ability to work productively from home has been fuelled by the recent lockdowns, and for many, the option to work for at least part of the working week from home is attractive. Subsequently, the apparent desire from workers for a partial return to the office and the shift in approach to a more hybrid-working model needs to be properly reflected by employers within their office space post-pandemic. The offices that will thrive are those that can deliver a better ‘collaborative experience’ for the time that workers are occupying them. This means going beyond desk spacing and hand sanitiser and looking at a change in typical office layouts, to allow for the introduction of more flexible and multi-use spaces and facilitate the positive aspects of office occupancy.
While the chance to interact, collaborate and have an office environment that is separate from home is important, employees now expect more in exchange for the time they spend in the more traditional office setting. The latest occupancy figures from CBRE are still below pre-Covid-19 levels, demonstrating that the appetite for a full return to the office remains cautious. Landlords who recognise the needs of post-pandemic workers and provide space to suit those changing requirements will benefit from the apparent improvement in demand for pre-lets and refurbished space, which are demonstrated by the latest figures from CBRE.
Businesses with a major presence and a large workforce often require central urban locations for their premises in order to amplify their strengths and facilitate the fostering of feelings of collectiveness and collaboration. Helping to create the right post-pandemic office environment is an exciting – if challenging – focus for employers and landlords alike.
Felicity Lindsay, real estate partner at Gowling WLG