Demand for offices in London halved amid lockdown

The demand for office spaces in London is tanking thanks to the coronavirus pandemic, according to a new study. The research also shows that available second-hand office space also spiked over the last year, reflecting the devastating impact the crisis had on the city’s businesses.

Recent years have been characterised by a spike in demand for London’s real estate sector. Despite the uncertainties of Brexit, overseas investment continued to flow into the capital’s office space market, as the low pound continued to make the European financial hub an attractive prospect due to its residual links with the continent. In the first half of 2017 alone, for example, £5 billion in Chinese capital was sunk into the city on this basis.

While this was partially due to new Grade A properties coming onto the market – almost double the amount available in 2019 at just over 1 million square feet – the growth in availability was primarily driven by second-hand space. At almost 2.5 million square feet, the sudden boom in second-hand availability reflects the tumultuous year London’s businesses have faced, with many either vacating their premises to reduce spending amid a huge recession, or collapsing into insolvency, leaving spaces vacant.

While more of this real estate might have been snapped up in prior years, demand has nosedived to less than half of the 10-year-average. Bidwells found that London saw 1.8 million square feet of office space taken up by new occupants in 2020, in stark contrast to the last three years – which each saw more than 4 million square feet taken. The situation was even more pronounced in the more expensive Grade A segment, with less than 500,000 square feet being taken up – compared to more than 1 million in 2019.

Original Post: https://www.consultancy.uk/news/27967/demand-for-offices-in-london-halved-amid-lockdown