Office availability in central London has reached its highest level in over 15 years. In August 2022, real-estate data company CoStar estimated that availability was around 31 million square feet. This is up 51% since 2019, when the availability was roughly 20 million square feet. CoStar says that the equivalent of 60 Gherkin skyscrapers worth of space are currently sitting empty.
One reason for this massive availability in space is that commercial rent in London was the highest in Europe, according to Statista, at the end of 2021.
Another reason that is impossible to ignore is the recent pandemic has popularised hybrid work. A recent study by the Office for National Statistics shows that 84% of workers preferred to continue splitting their time between home and the office, doing hybrid work. This means employees only have to come into work a limited number of days per week, allowing businesses to scale down the area of space that they rent.
This can save employers rent and bills, and also potentially cut costs of office supplies. All these reasons combined mean that landlords are not renewing their leases, post-pandemic.
Space32 found that the average number of people working in a London office was only 41. They found that these workers want 40% less time in the office than before the pandemic. They estimate that 58% of London businesses whose employees only attend their offices in person between two to three days a week are wasting up to £190,000 a year on empty workspaces.
Mahmud Shahnawaz, Founder and director of The Big Issue, said: “Empty commercial property brings with it a realm of issues for the community, from increased crime rates to poor local economies.”
The Advanced Workplace Association (AWA) estimates that less than half of workers in the UK’s banking sector, and less than a fifth in the insurance sector, attend work in-person per day. The average attendance of UK workers was found to be 29%, less than 1.5 days per week.
The Big Issue’s research manager Josh Cottell said: “As shown by the rise in empty office space following the pandemic, we could see more space going unused as working patterns change. Leaving sites empty comes at a cost for building owners, and it’s a shame to see so much space being unused when it could support the next generation of entrepreneurs, artists and activists to emerge and experiment.”
During and after the Great Recession of the late 200s, a similar over-availability of office space was noticed. In this period, the value of office space plummeted. In 2009, office availability peaked at 28 million square feet, which is lower than what we are seeing these days. The amount of empty space continues to rise, albeit slower than in 2020 and 2021, as people return to in-person work.
Mat Oakley, head of European commercial property research at real estate company Savills said in a quote to the Financial Times: “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 [reduction in space] is a trend going forward and a trend that needs to happen,”
