England Office Space Down By 18 Million Sq Ft
UNITED KINGDOM – The latest data from the Valuation Office Agency, which is part of Her Majesty’s Revenue and Customs, shows that total amount of workspace in England fell by 2 percent 12 months to March 31 2021, as building works stalled and businesses implemented flexible working arrangement, reported The Financial Times on Monday (3 January, SGT).
While 2 percent seems small, this is a lot as 18 million sq ft of office space were removed from the market during the COVID-19 pandemic and the amount of workspace is forecasted to continue dropping, as office spaces lie empty and the future of work remains uncertain.
The amount translates to around 15 times the workspace in 22 Bishopsgate, the biggest office building completed in London during the pandemic and about 35 times the floorspace in the Gherkin office building in the capital.
The decline in workspace is part of a larger shake-up of English offices, wherein property developers are under pressure to build more flexible and eco-friendly buildings in response to changing work patterns and more environmental regulations.
Office builders and landlords continue to be wary as office occupancy rates remain low. Despite having slightly surpassed 20 percent recently, average occupancy levels in the country plunged to around 10 percent in England in the week before Christmas as new COVID curbs were imposed, based on data from Remit Consulting.
Moreover, real estate experts think that the amount of office space available is likely to have declined further since March 2021, as commercial property owners and employers anticipate a more flexible future of work, wherein less workspace would be needed to house an equivalent workforce.
“Our view is we don’t need as much office space in the UK or anywhere else if high levels of agile working remain… it’s reasonable to say this (drop in space) is a trend going forward and a trend that needs to happen,” noted Mat Oakley, Head of European commercial property research at property consultancy Savills.
Savills forecasted that 1 out of 10 office buildings would be considered as excess supply in 5 years’ time as it believes that flexible working would persist beyond the pandemic. Consequently, this would make redundant old office properties that no longer met the demands of modern tenants or strict environmental standards.
“Some stock is no longer fit for purpose; in some places it isn’t viable to make it fit for purpose,” added Oakley.
