Despite the so-called flight to quality offices post-Covid, there remains a role for secondary stock in London’s market. With interest rate rises likely, Covid support packages ending and paused payments now falling due, the market below ‘top-dollar’ offices has plenty of life.

Tadhg Flanagan index

Tadhg Flanagan

Property headlines and London office market reports often feature top rents attracted by grade-A space. Yet the businesses filling this space leave behind buildings that need re-letting. Office churn is further spurred by changing work practices, with businesses taking less space as a result of flexible working, and seeking shorter leases or flex space. Savills’ research anticipates the latter forming 10% to 15% of demand within two years, and growing.

While some stock naturally becomes obsolete and ripe for redevelopment or conversion, the remaining ‘less glamorous’ space is bread and butter for many agents and asset managers – and occupiers.

For every business that can afford to pay top rents, more are seeking an economical option. London’s business ecosystem thrives on a variety of occupiers from start-ups to corporates. GLA research identified 1.01m SMEs in London in 2020, providing 52% of total employment. With these businesses come a variety of budgets.

Several London boroughs have introduced affordable office initiatives to preserve the diversity of businesses as office rents have risen. But there is also a market for value-for-money, well-run, well-located, secondhand flexible offices.

London_credit_shutterstock_IR Stone_573118837

London

Source: Shutterstock / IR Stone

Yet many London office market reports omit data on secondhand offices from average rent statistics. Are enough landlords taking advantage of this market in the chase to secure grade-A rents?

While new stock is overall more sustainable, reusing offers environmental and economical positives. Landlords with deeper pockets can upgrade to ‘regulation-plus’ or go further still.

There will always be businesses that can afford a statement building or to lease the very best space. But equally, there are plenty looking for good, value-for-money space. Indeed, the market depends on it.

Tadhg Flanagan is managing director at Breezblok