Office Landlord Expects Tight Supply Of New Office Space
UNITED KINGDOM – While the COVID-19 pandemic has dealt a huge blow to the real estate empires of Land Securities Group (Landsec) and Great Portland Estates (GPE) based on their recent financial reports, some of GPE’s latest figures show there is still demand for office space in London, reported the Evening Standard on Thursday night (12 November, SGT).
For instance, GPE revealed that it has £6.8 million worth of rental transactions under offer, mostly for its office properties, and these exceeded estimated values. This is in addition to around £30 million worth of other leasing deals still under negotiations.
The commercial property lessor shared that demand for its office space comes from different kinds of companies, such as tech firms, and financial institutions. These businesses want to make sure that their staff will have a comfortable and excellent contemporary workspace in a post-COVID-19 world.
Moreover, GPE’s report stated that companies are aware that there could be a shortage of new office space over the coming years, possibly leading to stiff competition for such commercial property.
For example, real estate consultancy CBRE estimated that 14 million sq ft of new office space is presently under construction in central London. However, 44 percent of this figure has already been pre-leased.
Although CBRE estimates that 32 million sq ft of new office premises could be completed by end-2025, construction work has not yet commenced for three-quarters of the upcoming supply.
Consequently, GPE is “continuing to see encouraging levels of pre-let interest in the near-term development schemes as larger occupiers look beyond COVID-19 to ensure they secure the best space for their business”.
Meanwhile, Landsec’s CEO Mark Allan shared that before the latest lockdown in the UK, office occupancy rates had been recovering. In fact, its office properties recorded its highest occupancy level since the first lockdown during September’s third week.
Firms that have recently leased office space include Arrival, a maker of electric vehicles that announced in September that it would increase the size of its west London headquarters by two-fold.
Earlier this week, London-listed office lessors saw large gains in their stock prices after Pfizer’s CEO Albert Bourla announced “positive efficacy results” for Phase 3 of its potential COVID-19 vaccine. And a successful vaccine could allow workers to return to the office safely.
