For the 4th successive quarter, the ‘list prices’ of quoting rents on our latest London office rental guide have remained the same as pre- Covid.
Whereas there are examples of second hand tenant space being offered cheaply, many landlords have decided to hold firm on quoting rents. Their view is that when the market ceases to operate, there is no point in reducing rents. They believe that when businesses return to the office, there will be a bounce back, as we have seen in the residential market and many global stock markets!
Whether they are right or not will depend on business resilience later on this year. Just as important will be the appetite of traditional office users to return to town.
Living at work?
I think traditional office users will return to Central London and the market will start to function again. Working from home has been surprisingly successful, but recently more and more people are complaining about living at work! Their home has become an office they can’t escape from and their work/life balance has become really blurred. In my own experience, I found myself guiltily emailing agents and clients on Sunday evening. Amazingly almost everyone responded by return!
Working from home has been surprisingly successful, but more people are complaining about living at work! Their home has become an office they can’t escape from, blurring their work/life balance.
Lease flexibility and generous rent free periods
We will see what happens to rental levels in due course and will continue to comment in this blog.
In the meantime, we are presently seeing a number of deals where tenants have been able to negotiate extremely generous rent free periods. We have also inevitably seen examples where landlords are offering far more lease flexibility.
Evidence of a growing gap between East & West London?
Notwithstanding the above, we are starting to see a gap emerging between rental levels in different London locations. We expect this to become more pronounced in the near future: offices in Holborn and further east will start to show greater value, compared to West End locations such as Covent Garden and Soho.