London’s office market, hit hard by working from home guidance during the pandemic, has seen encouraging signs of a bounce-back in 2021, new reports suggest.
Planning approvals, investor spend and office lettings all jumped this year compared with 2020, as businesses remained committed to maintaining space in London.
Colliers estimates that central London office take-up this year will reach 9.5 million square feet, up 55.7% on 2020 but still down on 2019 when 11.83 million square feet was taken.
Guy Grantham, director of research and forecasting at Colliers, said: “Expansionary demand, especially centred on prime, new grade A accommodation, is a major part of improved transaction figures, rather than mere churn.”
Property agent JLL said almost £12 billion of central London offices have traded so far this year, and investor spend could reach £13.7 billion by December 31.
That would be above the total of the last two years, but below the 10-year average of £15 billion.
Julian Sandbach, head of central London office markets at JLL, said: “Increasingly we are seeing investors and developers wishing to acquire or create the highest quality, most sustainable and amenity rich assets, recognising that businesses will want to locate in offices which both inspire, retain, attract and above all provide high well-being to their employees.”
He added: “Investors are now considering strategies for, 2022 and based on ongoing levels of activity we expect Q1 2022 to be a busy quarter across central London with continuing high levels of liquidity and yields remaining firm.”
Although working from guidance is back in place, and some companies are looking to reduce office space, a number of developers are betting on continued demand for modern and high quality office HQs, even if staff only use it for part of the week. Numerous employers have embraced flexible working during the pandemic.
The City of London Corporation said the amount of Square Mile office floorspace that got the green light for development in 2021 surged year on year.
Evening Standard (Joanna Bourke) - https://www.standard.co.uk/business/property/london-office-market-report-bounce-back-2021-b973152.html