Are you facilitating your team a smoother transition back to the workspace?

An update into the commercial real estate market in London and how the effects of the pandemic have changed the trends in prime commercial units with an increased priority around health and wellbeing.

2 minute read

1st June, 2021 | Remarcable

The UK is emerging from the third series of national lockdowns, there has been no doubt that the past year has brought upon many challenges, changes and much needed adaptations to offices and the towns and cities around them. 

In the next few months we will see more people return to their usual workplace as restrictions are slowly easing and the economy begins to bounce back. However, employee demands have changed as a result of the pandemic with 70% of UK survey respondents wishing to work remotely for more than one day per week. Working from home proved to better work-life balance, provide better financial outcomes for employees and environmental benefits of reduced travel. With this in mind employers have been obliged to restructure, restrategise and reorganise the future of their office spaces and plans. With many introducing a hybrid work model, which is a location-flexible arrangement that allows employees to combine onsite and offsite work as they and their employers see fit.  

With the office of the future changing to a more flexible way of working, how has this changed the demand for commercial real estate within the London market? Since Q1 of 2021 Central London office take-up totalled 1.3 million sq ft, the highest figure since Q1 2020 but still 46% below the 10-year quarterly average. While it is predicted that office take-up over the rest of the year will be at least 25% below trend, there is every reason to expect a surge in demand as 2021 progresses. What is particularly interesting to note is that in 2020, over 45% of all leases signed were for terms of three years or less, compared to the five-year average of 22%. However, larger units, in excess of 5,000 sq ft, continued to show less flexibility with just 21% of units let in terms of three years or less. Tenant favourable trend conditions that are being seen include incentives such as flexible leases and extended rent-free periods. Flexible leases will be particularly important to firms signing for new office space. Over the last decade, 5-10 year lease lengths years have become the norm, however as the market softens these are set to reduce further to 3-5 years to allow for increased agility and flexibility.

In such a crowded market place and prioritisation on health and wellbeing, new/refurbished space is likely to be much more sought after by occupiers, and as a result these spaces will remain in extremely short supply. Meaning differentiation of product and development of USPs will be essential for landlords marketing retail spaces with an added attention to healthier spaces prioritising assessment of the office ventilation system as well as enough space for social distancing requirements with quiet work spaces as well as collaboration and team interactive spaces. Therefore the downsizing of offices may not be as prevalent as we may have originally predicted, but instead a heightened importance in office space planning and design.

Although we still remain very early on in the emerging from post Covid-19 only time will continue to tell where the balance lies, but one thing is for sure the idea of 100% remote working is not one that is being promulgated in the market. However, one thing that remains very stable is the importance of staff wellbeing in their direct environment which is of top consideration when it comes to making decisions around new office spaces. 

As wellbeing focused commercial interior designers our expertise is creating spaces for a happier and healthier work life. We understand that an office is more than just a place of work; it's a place of unity, collaboration, creativity and innovation with the people at the heart of it. Let us help support you in the designing of your office of the future, with a tailored human-centric approach to exceed all you and your staff's needs in ensuring optimum wellness and productivity in the workplace. 

Sources: Colliers Office Snapshot 2021

                The future of UK regional office demand

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