Freedom day wasn’t quite the ‘disaster day’ some had forecast, but it didn’t feel particularly liberating, did it? With Covid cases continuing to rise and some of the double-jabbed among them, it is little wonder that people remain anxious about returning to the office (or heading to the shops).
It is fair to say Landsec may have overstated the extent of the return to the office in its recent report, but while employees may be filtering back to the workplace more slowly than hoped or expected, it has done nothing to dampen investor appetite for the workplaces they have yet to fully return to.
Rather the reverse. The office sector has not just bounced back, it now tops the investment table, leading the mighty sheds sector. Office deals accounted for 31% of investment activity in the first half of 2021 by value, according to the latest JLL data, while industrial deals accounted for 27% – not bad for a sector so badly affected by the pandemic and WFH that many were predicting its demise.
Investors clearly still have faith in the long-term future of the sector, which is perhaps no great surprise given the world-class assets up for grabs. What is surprising is that occupiers are champing at the bit, too, and not just to take space in central London. First-half office take-up in Greater London and the South East was up 67% on the same period last year, according to Savills. While this is off a low base, it hardly paints a picture of a sector in terminal decline.
That is not to say normal service has been resumed. It will be some time before the pandemic is no longer visible in the rear-view mirror. However, the sheer number of good news stories in this week’s issue shows that, having pressed pause for the best part of a year and a half, many businesses are now hitting the play button once again.
In some cases, a changing of the guard is taking place, although not necessarily of the sort you might expect, with the old making way for the new. As the number of flexible office casualties continues to mount, one of the oldest outfits around, Grosvenor, is planning to roll out its new flexible workspace brand 25 EP and take full advantage of its landlord status.
Others are adapting their offers to suit the demands of the post-pandemic workforce. Take Sellar, with The Exchange at Paddington Square.
Even in the sectors hardest hit by the pandemic, such as hospitality and leisure, there are signs of renewed activity. Who would have predicted that anyone would be brave enough to hit the expansion trail in the F&B sector this year, let alone three players: Patty & Bun, Incipio Group and Mercato Metropolitano?
Retail, too, while not yet enjoying anything resembling a renaissance, is showing a few green shoots of recovery as the department-store-based model of old starts to be replaced by a concept and brand-led offer, as demonstrated by the latest trio of fashion and beauty lettings at Metrocentre in Gateshead.
Meanwhile, industrial continues to go from strength to strength. Amazon is on track to sign a record number of leases this year, although interestingly on smaller amounts of space, sparking speculation it is looking to bring its supply chain in-house.
After a dismal 2020 and difficult start to 2021, this summer is shaping up to be hot in more ways than one.
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