For serviced office space in London, our estimate for rent per desk per month has remained the same in 12 of the 19 areas we cover. In the other 7 locations, serviced office rent has reduced by approx 7-8%: Marylebone, The City, Farringdon, Shoreditch, Bloomsbury, Euston & Waterloo / London Bridge.
3 reasons why we’ve not witnessed an office rental tsunami?
So the 50 million dollar question: what’s happening and why hasn’t there been a rental tsunami in these extraordinary times? I can’t provide definitive answers, but I can see at least 3 special characteristics in the office market which can perhaps help to explain this paradox.
Tenants have decided that they simply want more out of an office in order for it to merit the expense.
- Our relationship with offices is different to the way we demand and consume other goods like food and drink. Offices take lots of time, effort and investment to set up. They tend to be occupied under lease agreements for a period of years. For conventionally leased offices at least, many tenants have been bound by agreements that were executed prior to the pandemic. For these tenants, office rent has largely remained the same.
- There has always been a relative scarcity of really good quality office space. As a result of our Covid experiences, we are detecting a flight to quality amongst many companies. Tenants have decided that they simply want more out of an office in order for it to merit the expense. Collaborative, efficient, airy working spaces with light and volume are now in high demand. This has ironically exerted upward pressure on the rent for some great quality work spaces.
- Many landlords have been shrewd enough to appreciate that demand has been weak during the pandemic for health and not cost reasons. These landlords are a bit like that euphemistic deck chair seller on the Titanic! Even reducing the rent by 90% during the lockdown, would still not see their office space snapped up! London office rents therefore has remained largely the same.
Many landlords have been shrewd enough to appreciate that demand has been weak during the pandemic for health and not cost reasons. Rent therefore has remained largely the same.
I predict a quiet couple of months in the London office market over the Summer. However I’m an optimist and therefore really looking to September…
Serviced Offices Location Guides
We have serviced office location guides for each of our 19 London locations:
For more general information about flexible office space, please see our Serviced Offices in London guide.