As we passed the two-year anniversary of the first lockdown last month, City A.M. sits down with the CEO of London’s oldest office provider, who came out of retirement to drive the business’ post-Covid recovery.
Shedding light on how the business and City has suffered, Argyll CEO John Drover reveals to this paper how his company plans to build back and shape the pandemic recovery.
Drover, as the chief executive of Argyll, which has over 30 premium flexible workspaces as a landlord to 8,000 professionals across the City and wider capital. has a familiar face in the City since the 90s.
He saw the business through the GFC and dotcom crashes but returned from retirement this year to lead its pandemic bounce-back, so has a fascinating story to tell.
For example, Pret A Manger’s index shows the City of London is only at 76 per cent of pre-Covid levels, a sign that workers are trickling rather than flooding back to the Square Mile.
However, Argyll’s occupancy stats present a fascinating counter-view: some of its buildings west of the City have been at 100% occupancy throughout the pandemic and buildings in Mayfair are already at 80% and rising. London is bouncing back but is its central hub moving from east to west?
You returned from retirement to get Argyll through the pandemic. Given you saw the business through the GFC and dotcom crashes, what lessons did you learn and how have they been applied to the business’ pandemic bounce-back?
You’re right, I was part of Argyll (then called London Executive Offices) as it navigated these various crashes in the early 00s. I came out of retirement last year because I saw a great opportunity to rebuild and grow Argyll into London’s finest flex office business.
The key takeaway from these downturns that I took on board when tackling Covid-19 was the importance of a diverse customer base and the ability to respond to a crisis quickly.
“When the dotcom crash happened, our clients were largely made up of technology companies tailored to the dotcom boom, which meant we saw wholesale departures from our offices.”John Drover
When the GFC struck, we were more prepared, as we had diversified our client base with smaller space occupiers across a wide range of sectors. As a result, occupancy was far more protected in the GFC.
Now, looking at the effects of the pandemic, Covid-19 hit all sectors at the same time with little warning; overnight, businesses left their desks en masse to work from home. By the time I returned to Argyll in February 2021, our occupancy had fallen to below the levels of the dotcom crash, so I anticipated a 3-year recovery in line with previous downturns.
However, the bounce-back looks set to be far quicker than this – we predict to be back at pre-pandemic levels by this summer, equating to a fast, 2-year V-shaped recovery. In part, this rebound is due to the fact many companies didn’t have their own downturns – Covid just forced them to operate from home for a while.
I understand that some of your buildings in the west of the City have been at high occupancy rates throughout the pandemic. Which areas of London are bouncing back fastest and why?
Yes, our offices in Chelsea and Belgravia retained high levels of occupancy throughout the pandemic and this probably reflects the nature of our customers in these areas – small boutique firms with employees living a short distance away from the office. Post-lockdown, these areas have continued to thrive while the City and West End caught up very rapidly.
Does this indicate that London’s financial hub may move from east to west? And what does it reveal about the post-pandemic strategies of London’s businesses?
The truth is that boutique financial services firms have always clustered in the West End and will continue to be drawn to the area due to the amenities and brand credentials it offers them.
“I am sure the West End will remain a financial hub for boutique firms and offices in the area will be key to their post-pandemic recovery strategies.”John Drover
Conversely, larger financial institutions will remain in the City due to the availability of large office spaces. Many firms have missed the ability to meet with clients, network with peers and develop new recruits during the pandemic – all things that an office in prime Central London can offer on its doorstep.
Is flexible working just a fad?
Far from it. Flexible working is not a new concept in London. Long before ‘Zoom’ or ‘WFH’ appeared in the public consciousness, many of the capital’s finance professionals were working flexibly. Their deal-orientated work meant they would be in the office when a deal was closing or for client meetings, but could work from home on quieter days.
At Argyll, our clients have been working this way for over 20 years. Many have operated to their own schedules since acquiring their first BlackBerrys in 2003 and our offices have always been quieter on Mondays and Fridays, so we are not seeing any dramatic ‘flexible working’ sea-change post-pandemic. Flexible working has been here for some time and is here to stay.
Interestingly, we haven’t seen our customers demand more flexibility since the pandemic. We have been offering hybrid and hot desking solutions over the last year but overwhelmingly these small working groups still want their own private offices where every member of the team has a desk to work from.
Ultimately, why are financial service firms sticking with bricks and mortar and investing in their London HQs?
I think it comes down to the nature of the industry. The financial world is built on relationships, so the face-to-face communications with colleagues and clients, facilitated by office working, is vital to their day-to-day operations. It is clear that remote working has lost its charm for many and London’s professionals are eager to make the most of the collaboration and creativity that being in the office together again can enable.
“The brand credentials that a prime central London office brings cannot be replaced by a coworking space or remote model.”John Drover
Having a prestigious address is invaluable in building and maintaining a credible reputation – something that remote working during the pandemic has only underscored.
Given this, the future of work for many London businesses is simple: occupy great buildings in prime locations that combine first-class customer service and excellent amenity space with contractual flexibility, all for a simple monthly fee. In short, businesses pay for what they want, when they need it, but do not compromise on facilities, location or productivity.