Lockdown saw vast swathes of empty office space all over the world. I visited a business centre in Victoria for a client viewing in late-April. The building had occupancy of just 40 people out of its 1,500 person capacity. It was a depressing sight.
How is London’s serviced office market operating?
Since lockdown ended, occupancy has shot back up to around 50% in central London serviced offices. Following the recent announcement of new restrictions – including instructions to work from home where possible -demand has slowed somewhat. The government’s timeline of another 6 months has no doubt given many businesses pause for thought. Whilst restrictions remain in place, the market will continue to be subdued, albeit not quite as significantly as during the first full lockdown.
However, I am still seeing clients looking to take up serviced office space across London. From the conversations I’ve had since the new restrictions were introduced, most employers foresee their staff continuing to use their office space, albeit in smaller numbers and on a rotational basis.
The business centres themselves are running normally, albeit often with reduced staff, either through being furloughed or through redundancies. Thankfully, we’ve not yet seen any providers go bust. Having said that, I suspect we’ve not yet felt the full long-term impact of this pandemic.
What has happened to serviced office rents in London?
Broadly speaking, starting rents for serviced offices remain the same as they were pre-pandemic. There has been a small downward adjustment amongst some of the independent business centres. However the bulk of the market is currently listing the same price per desk per month as they were prior to lockdown.
However, there is naturally a far greater opportunity for negotiation than there would be in normal times. As a result, we are seeing lower rents agreed through negotiations across the board.
Broadly speaking, starting rents for serviced offices remain the same as they were pre-pandemic. However there is now far greater opportunity to negotiate lower rents across the board
Are business centres offering their tenants more flexibility?
In contrast to leased office space, flexibility of term has never really been an issue in the serviced office market, so term lengths have not changed at all. Monthly, quarterly, 6-monthly and 12-month agreements are all still an option.
However, some providers are offering greater flexibility in the event of another full national lockdown. In effect, they will allow tenants either to freeze their contract or pay a reduced rent, should they be unable to use their space by law. It’s important to note the majority of business centres are opting not to include any Covid clauses in their terms.
How do you carry out Covid-secure serviced office viewings?
During the lockdown, we conducted all viewings virtually, either via Zoom, Skype or WhatsApp or links to pre-recorded video sent by text or email. Since the loosening of restrictions, in-person viewings resumed, carried out very much in the normal way, but with social distancing measures, masks, hand sanitisers etc. Most properties stipulate a maximum of 2-3 people per viewing, excluding the building manager conducting the tour. Of course, virtual viewings are still very much an option though for those that prefer. The growth of convenient virtual viewings is one of the few benefits to emerge from the pandemic.
During the lockdown, we conducted all viewings virtually, either by via Zoom, Skype or WhatsApp or links to pre-recorded video sent by text or email. One of the few benefits to emerge from the pandemic.
How have business centres adapted their everyday operation to the ‘new normal’?
Business centres are operating as normally as they can – of course with adjustments to comply with regulations as well as meeting tenants’ expectations in the ‘new normal’. Every provider has invested heavily to create a covid-compliant working environment. Hand sanitisers, additional signage, perspex screens and one-way systems are all now standard issue. Revised layouts prioritise adherence to social distancing measures without compromising smooth movement around a building as far as possible.
Every serviced office provider has invested heavily to create a covid-compliant working environment. Hand sanitisers, additional signage, perspex screens and one-way systems are all now standard issue.
During the height of the first wave, many centres closed their coworking spaces entirely. However, most re-opened as lockdown ended and remain open despite the new restrictions. Meeting rooms are booked and used in the normal way, but with a one-hour time slot between each meeting to allow for cleaning/sanitisation.
All outside spaces remain in operation as usual.
How should businesses conduct their office search in the ‘new normal’?
Very much the same as before: contact us to let us know about your office space needs and we will take it from there. Virtual viewings or in person, if you prefer. It’s entirely up to you.
Serviced Offices Location Guides
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For more general information about flexible office space, please see our Serviced Offices in London guide.