Demand for central London's Grade A office space hits an all-time high
Whenever there is a major change in economic circumstances, people’s office needs also change. The effects of Brexit, the pandemic and hybrid working will perhaps be the most radical catalyst for ’musical chairs’ we’ve ever seen.
That said, as a snapshot today, Grade A office space in the West End is already leasing at record levels even though many company directors and HR departments haven’t yet enticed all staff back to their desks
So how did we arrive at this paradox? Andrew Knights, Head of Agency at The Lorenz Consultancy, reveals how the past two years has shaped today’s emerging trends
Emerging trends in the office market
A new hybrid working model based on an anticipated 2-3 days a week in the office and 2- 3 days working from home capitalises an element of downsizing. Demand is now for quality over quantity, with occupiers paying higher rentsates per square foot for less space.
Less space also means lower rates payable, and overall outgoings. Rates payable are in the ballpark of 50% of the pre-pandemic rent per square foot.
Quality premises in Marylebone, St James’s and Mayfair are in massively short supply, and post-pandemic rents for some buildings have risen between 25% and 40% compared with 2019. Occupiers are entirely focused on acquiring the best offices available, fully refurbished with the latest technology and mod cons, including ventilation, cooling and heating systems. This no-compromise approach has broadened the gap between grade A and B offices, leaving older premises that do not meet the occupier’s criteria difficult to let.
Andrew Knights, Head of Agency at The Lorenz Consultancy
The demand for best space has already outstripped supply, where slowdown in construction and refitting space has exasperated the problem. Businesses are often considering taking two smaller floors instead of single floors, and even self-contained buildings have become more desirable than they were in the past.
A Lorenz Consultancy survey of 8,000 office tenants showed that 70% of decision-makers hadn’t yet agreed their long-term plans. Some directors want a full-time return, others hybrid model, and some don’t believe they need an office at all. Many believe that the office is still essential for its values on collaboration, creativity, mentoring, and of course, social contact and relationship-building opportunities.
Landlords recovering from the financial disruption of the pandemic are looking at high-quality refurbishments to appeal to occupier demand. Until companies surrender their leases on Grade B premises, a lack of stock is available. Many recent acquisitions have been off-market to avoid other tenants competing with other clients in securing space.
This article was written by Andrew Knights, Head of Agency at The Lorenz Consultancy, an award winning commercial property consultancy based in Hanover Square, London. www.thelorenzconsultancy.com
Do you need help finding an office? With competition for London’s office spaces hotting up, we can help secure your new workspace. Our agency team will work with you to assess your needs, find the perfect space and use our negotiation skills to minimise terms.
Please contact Andrew Knights for an informal discussion on 07825 742853 or email email@example.com
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