Central London Office Occupancy Of 29% Could Be Wrong
UNITED KINGDOM – The CEO of an office landlord and developer in central London thinks that the 29.3 percent office occupancy rate stated by Remit Consulting for the start of June 2022 could be erroneous, according to an article that was published on Property Week on Wednesday morning (13 July, SGT).
Helical’s Chief Executive Gerald Kaye said it’s unclear if Remit’s figure represents actual physical occupancy as a percentage of total office capacity pre-COVID. He explained that while they now do a weekly count of staff reporting to any of their office buildings, they don’t have accurate in-house data prior to COVID-19.
“Research in 2010 by the British Council for Offices cited an average occupancy rate of 60 percent, so it is clear that even if Remit’s figures are correct, they only signal a halving of occupancy, rather than the figure being down two thirds, as some people claim.”
But without an accurate pre-COVID baseline, any post-pandemic office occupancy rates are open to being misinterpreted. And while office towers are designed to be occupied by an individual every 80 sq ft or 100 sq ft, instances wherein an office building is fully physically occupied are “rare”, especially in larger offices due to holidays, illness, travels, or client meetings.
“So what data is consistent pre- and post-COVID? For London, the best indicator is Transport for London (TfL) information. TfL publishes data on the daily use of tubes and buses taken from turnstile touch-ins. The margin of error for this data is low and constant pre- and post-COVID,” he noted.
Based on the latest data as of 9 June 2022, 2.94 million people used the tube versus 3.91 million on Thursday 5 March 2020 before the pandemic happened. That translates to a 25 percent reduction, not a 50 percent fall. Also, if passenger data for 8 March 2020 and 12 June 2022 are compared, the difference is merely 2.5 percent.
“I would therefore conclude the midweek variable is mainly the office worker who has either transferred to the bus, where journeys are only down 15 percent, found an alternative travel mode, is perhaps walking, running or cycling, or is working from home. The least positive interpretation of the data is an office occupancy level of around 65 percent compared with previous rates, rather than Remit’s 29.3 percent.”
“To further advance my argument, recent Google data shows that 60 percent to 70 percent of City employees are back at their desks. This also chimes with the occupancy figures for our own portfolio of between 60 percent to 75 percent, depending on the building,” Kaye added.