1.8 million m2 of UK office floorspace taken out of use in the past year – equivalent to 248 football pitches
In the past year* 1.8 million m2 of office floorspace was taken out of use in the UK , the equivalent of 248 football pitches, shows research by Boodle Hatfield, a leading private wealth law firm.
London has seen the most amount of office space taken out of use, with the greatest amounts of space lost in the following areas: Westminster (194,000 m2), followed by the City of London (142,000 m2) and Camden (53,000 m2). The study looks at 347 areas in the UK and is based on data from the VOA.
Boodle Hatfield says the fall in office floorspace is likely due to changes in working patterns since the pandemic and ongoing development/refurbishment of office floorspace. The study looks at office space that has been taken out of use permanently or is undergoing significant work which have prevented it from being occupied.
The widespread shift to hybrid working has led to some businesses significantly cutting down on their office space by subletting or in some cases, choosing not to renew leases.
Commercial landlords who are struggling to find replacement tenants are also taking the properties off the market for redevelopment into better grade office space or for change of use into residential property.
David Rawlence, Senior Associate at Boodle Hatfield, says: “London has seen significant amounts of office space being taken out use in the past year – with prime central locations accounting for the greatest losses.”
“Businesses that have adopted hybrid working models may not be prepared to lease the same amount of floorspace as pre-pandemic or may be unwilling to commit to space which is not “Grade-A”
Boodle Hatfield says despite the large amounts of space taken out of use, there continues to be high levels of demand for ‘Grade-A’ office space, this is line with the general trend of a “flight to quality”. Grade-A office spaces are typically high quality, highly energy-efficient and modern in design. These spaces often feature worker-friendly initiatives like breakout areas to brainstorm or designated zones to relax.
David Rawlence says commercial landlords should consider adapting their office space to meet changing demands from businesses. One such route is pivoting towards a co-working model in one way in which landlords are seeking to diversify revenue.
He says: “Converting traditional offices to co-working spaces could enable commercial landlords to make full use of available space.”
Top 10 local authorities with the most amount of office floorspace taken out of use
*Year-end March 31st 2022
Extracts from this article were covered in CityAM, The FT, CoStar and Estates Gazette on 21 November 2022.