The unprecedented events of the last 24 months have led to a seismic change in the way businesses operate. Many organisations who were firm believers in the necessity of staff working in the same office have now realised that there is significant merit in staff working either from home entirely, or adopting a more flexible approach that allows for an element of home working.
As a result, there has been much debate on how these changes will impact tenant demand for offices. Many large and expensive floorplates in regional cities have been empty for 18 months with many occupiers reviewing how much space they actually need to remain operationally effective, balanced against their occupational costs.
Whilst we are still working in a COVID-19 world, it is difficult to anticipate how demand will change. From our recent acquisition work in the office sector, it is clear that many locations remain strong, with particularly good demand for smaller floor plates of circa 1,500 – 3,000 sq ft. Landlords of larger floor plates have been required to split space to meet current tenant preferences. It is apparent that tenants do still feel the need to have an office presence, even after the events of March 2020 and a change in the way businesses are operating.
For the major cities such as London, Manchester, Birmingham etc, office agents are reporting that enquiries are up.
Some businesses are looking to downsize to suit flexible working whilst others are considering upsizing to allow for possible social distancing requirements in the future. Businesses are becoming more astute to the quality of the available space. Proposed changes in EPC ratings and the desire of tenants to occupy more substantiable “green” space is ever more important. Those buildings which fall behind in terms of specification/quality are likely to prove harder to let, with a likely downward pressure on rents.
For further information on our views on the office sector, please get in touch with a member of the office agency team; Darren Coleman and Freddie King
Read the full Green & Partners 2021 review and 2022 outlook