London ‘busier and busier’ as return to office gathers pace – but demand for flexible working remains
Great Portland Estates, a leading landlord in office space said London has got “busier and busier,” but noted that it does not expect the the recovery of offices in the capital to be “uniform” as a demand for flexible working and best space remains.
Throughout the year, the property firm recorded £55.5m of leasing, as it was bolstered by the completion of a new headquarters for law firm Clifford Chance at Aldermanbury Square.
As shoppers returned to the highstreet, GPE also secured £10.2m of rent via 35 new retail leases including units at 70/88 Oxford Street, W1.
As the capital fully reopened post pandemic the group noted that vacancy was also down to 2.5 per cent this March compared to 10.8 per cent in March 2022.
“Whilst macro-economic challenges are likely to persist, we do not expect the recovery to be uniform,” Toby Courtauld, chief executive, said.
He said: “For some time, we have witnessed a growing divergence between the prospects of the best spaces versus the rest, and we believe this is set to widen further as customers seek out sustainable and well designed, prime spaces, of which there is a marked shortage, particularly in the West End.”
It comes as London has been adapting to a new hybrid working environment, with many employers now allowing staff to split their time between work and the office.
A report authored by the Centre for Cities think tank urged the government and mayor of London to reduce cost-barriers for commuters using public transport, and “work with businesses” to increase the minimum number of days workers are expected in the office.
However in recent months, there has been a call from government and business to get workers back in the office on a more frequent basis.
Just last week, Chancellor Jeremy Hunt, said the office should be the “default” location for capable workers as he expressed fears that excessive homeworking could lead to a “lack of creativity” amongst employees.
“Central London has got busier and busier and it’s pretty much back to its starting best. Even the most enthusiastic hybrid working organisations have realised that great offices in great cities have a crucial role to play in the world of work, and workers are returning,” Courtauld told investors this morning on a conference call.
However for many employees, remote working is still a favourite, with ONS data from March showing that one in five London workers still work remotely post pandemic.
It appears that GPE is keen to adapt some of their business model to reflect the changing corporate landscape – with the group revealing its upping its targeting to one million sq ft of flex office space over the next five years.
“There is a clear market opportunity with 20 per cent of the London office market expected to be flex by 2028, and more than half of London occupiers expecting to have at least 10 per cent of their office footprint as flex,” Nick Sanderson, chief financial officer said.