239 football pitches worth of office space lost in past year
A total of 1.7 million m2 of office space was lost in the past year* in England and Wales - the equivalent of 239 football pitches, shows research by Boodle Hatfield, the leading private wealth and property law firm.
The study by Boodle Hatfield, based on business rates data, shows that the amount of office space being taken out of use has accelerated in the past year, rising 70% from the 1 million m2 that was lost the previous year.
The areas with the highest proportion of office space lost include: Derby (20%), Brent (19%), Brentwood and Southampton (18% each) and Ealing (14%) (See table below.)
The study refers to office space that has been permanently taken out of use, rather than space that is currently vacant without a tenant.
Boodle Hatfield says drops in office occupancy rates due to the switch to remote working during the pandemic is likely to be a key driver for space being lost. It is likely that much of this decommissioned office space is expected to be converted to residential property.
David Rawlence, Associate at Boodle Hatfield says: “Coronavirus has shaken up the commercial property landscape, resulting in substantial quantities of office space being put out of use. This has been particularly evident in smaller cities and outer London suburbs.”
Boodle Hatfield says despite the loss of space, fears that the shift to remote working would lead to the ‘death of the office’ have proved unfounded. Instead, many businesses have switched, at most, to a ‘hybrid’ working model.
Boodle Hatfield says offices in prime locations with good connections to public transport links and local amenities will continue to appeal to businesses. However, to attract and retain tenants, commercial landlords may need to be prepared to offer more flexible lease terms, better quality office space and amenities.
Landlords who are looking to diversify revenue streams might want to consider converting traditional office buildings into flexible workspaces. This may involve sub-contracting to third party operators or letting/licencing converted space to businesses directly.
Boodle Hatfield says as businesses look to use office space differently, design will be a key consideration. Companies may wish to cut down on desk space in favour of ‘breakout areas’ to foster greater collaboration or build soundproof booths so that people can have calls in private.
David Rawlence says: “Businesses are increasingly looking for high-spec office space with all the mod cons in order to tempt workers back into the office. Spaces that facilitate collaboration between colleagues, with amenities that promote mental wellbeing such as gyms and relaxation rooms. Such spaces will be the most attractive to prospective commercial tenants.”
Top 10 areas with the largest proportion of office space being taken out of use
*Year-end March 31st 2021
Comments from this article were covered in the Financial Times on 3rd January 2022.