The impacts of Covid-19 on the London commercial property market are yet to be full understood. While many people have been able to work from home over the past few months, offices are now beginning to reopen, and employees are slowly starting to filter back in, as are shops, – albeit in very different environments to before.
However, far from being the death of the office, there is much evidence to suggest that the it could become an increasingly important strategic business tool. According to analysis from business consultancy DeVono Cresa, commercial occupier demand for London office space fell by 30 percent across Q1 of 2020. There was also a drop in the number of financial firms leasing space in London. The quarter also saw the lowest level of deals across the West End in three years. But this is unsurprising given that many offices have been empty for the past few months – or at least occupied by only essential workers.
There’s no denying that the past few months have forced many businesses to view their use of commercial real estate through a different lens. While offices prepare for employees to return, implementing extensive social distancing and hygiene procedures, it will be a long time before we may see all workers returning to the office five days a week, nine till five. Instead, shift patterns and rotas will become the norm, and a greater emphasis will be placed on what amenities and facilities commercial office space can provide. In turn, landlords will have to focus on what they can offer their occupiers in order for them to continue flexible and agile working, attract the best employees for their individual businesses and therefore continue to see the value in real estate as a business asset.
For businesses looking to invest in office space as the UK slowly starts to come out of lockdown, there’s plenty of options. Landlords are having to be more amenable in terms of contract length and flexibility. When it comes to office space in London, there’s also a great range of areas to choose from that are easily accessible and central, but where cost per desk is lower, such as Stratford, Hammersmith, White City and Shoreditch.
Similarly, the retail landscape is changing. While shops in England have reopened, the way we shop is set to look very different for a long time. Many businesses who have had great success via online sales over the lockdown period may now look to invest in warehouses and storage space to focus on the ecommerce side of their business, opposed to storefronts which require social distancing measures that may be impossible for smaller retailers to implement.
Overall, the future of the commercial property market is shifting, but not collapsing. Real estate will always be a vital component for how businesses operate – but exactly what this will look like in the future remains to be seen.
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