Don’t believe naysayers predicting the death of London and a exodus to rural idyll, the capital will be rich with post-pandemic opportunities
London, as I know and love it, is a place of streets swelling with people, of shimmering, seductive shops, enticing bars and restaurants from every corner of the earth, and of constant sound – the hum of the UK economy. The capital attracts more than 20 million overseas visitors a year, drawn in by theatres, concert halls and monuments which Londoners themselves tell me they “really ought” to take more advantage of.
But, in a time when the joys of city life are obscured, many question whether London will hold the same draw for people once social distancing is finally behind us. A regular conversational trope now involves wistful thoughts of “just a little more space” outside of London, sprinkled with idyllic rural imagery. By extension, some companies are considering their needs around a more flexible work environment, and even asking themselves if they need a shiny headquarters in a capital city.
It is easy to feel that the ‘moment’ of the present pandemic is so powerful as to have turned the future on its head. But there are good reasons to believe London will return as a global beacon of culture, thronging with the some of the most brilliant people on earth. It is likely to happen faster than one might think, perhaps almost as suddenly as the city emptied out last March.
Even in the brief period between the second and third lockdowns, we saw London explode back to life in vivid colours. While people were allowed, many gathered outside restaurants and bars in coats and scarves, rain or shine instead of being confined to yet another bottle of Merlot at home.
I love the countryside, and I want to live there when I’m retired. But for the majority of the workforce, the same handful of bars and restaurants in provincial England lose their novelty after the umpteenth time.
Heading permanently to the country is not just leaving behind more than 20,000 bars and restaurants. It is to abandon befriending, dating, and working together with largest group of talented, educated people in Europe and to shut oneself out of the deepest pool of potential employers in Europe too. Today, even the option of leaving London for Europe is no longer simple, since visas are a necessity in a post Brexit world.
In the London office market, rents are already spiralling down and the new space being built will increase supply still further, punishing property owners. But despite this pain, we will also see the demand for great buildings with great tenants growing. Smart investors will pick their time to invest, while London’s future is under scrutiny.
There are hundreds of billions of pounds out there, looking for stability and some yield while their cash earns nothing. In particular, we’ve seen a wave of new institutional groups from eastern markets focus on leased London offices over the last ten years, a level we believe is the tip of the iceberg as Asia continues its economic ascent.
For many such investors, London’s brand is key. The UK remains a global ambassador (Heathrow has the most international linkages on earth by a wide margin) with a fair legal system, long term systemic stability, and a business friendly ethos. And with an ongoing chill in the air between China and the US (a rare Trump/Biden continuity project), London is well-placed to remain at or near the top of the league for global investment as travel returns.
These investors know that many top companies are in London for reasons that become even more important in a post Covid landscape. Offices are less and less about employees showing up to tap away at a keyboard. They are about access to free-flowing knowledge, to exciting new ideas, and to management, both formally and informally. Employers I speak with reflect this theme, valuing shared cultures and creations that come from physically blending together new perspectives, something that is limited on-screen.
The novelty of working from home is now long gone, dampened by the ennui of collective isolation and punctuated by cries of kids, pets, and those annoying little habits of our housemates. And with [27%] of the population vaccinated, a great result by our government, the day when we return to offices is drawing closer, even if not for a full five days a week.
We used to say “he who pays the piper plays the tune”. Today’s office employment market is very different. In the war for talent, now it is pipers not payers who dictate terms. The best people seek to work in the best offices, in the best locations, surrounded by the best people. They want to spend their days in inspiring settings and to end their days near to the pubs and bars of the City, the seductive restaurants of Mayfair, the new pop ups in Haggerston, or the 40 or so theatres of the West End.
After a year stuck indoors, only 13 per cent of Londoners want to work from home full-time when the worst of Covid is over. People have a lot of “just one drink after work” credits to use up in the evenings. And as they return to the centre of our great city, the sound of “sorry” as people jostle on to the tube, “pardon” as they push past each other on the street, and the cry of “FREE PAPER” from outside stations will all ring out once again. In a few short weeks, London is set once again to beat loudly as the heart of our country and our lives.