Thu. Jan 20th, 2022

The amount of office space in England fell by millions of square feet during the pandemic and is expected to continue to decline, with jobs dwindling and questions about the future of work unresolved.

The contraction is part of a huge fluctuation of English offices, which developers are under pressure to make more flexible and greener in response to work patterns shifted en a rising tide of environmental regulation.

The amount of office space in England fell by 2 percent in the 12 months to March 31 last year, according to data from the Valuation Office, part of HM Revenue & Customs.

This represents a drop of more than 18m square feet in the period – about 35 times the floor area in the Gherkin office building in the City of London, or almost 15 times that in Bishopsgate 22, the largest office building destroyed during the pandemic in the capital is complete. .

The VOA data showed a significant contraction in the national office footprint in the year after coronavirus first swept the UK, causing a national collapse. The fall came in part because construction work came to a halt during that initial restraint.

Line chart showing how England's office footprint decreased

Developers have remained cautious ever since, with occupancy levels remaining stubbornly low. After rising above 20 per cent recently, average occupancy rates in the UK in the week before Christmas dropped to around 10 per cent in England as new coronavirus restrictions were introduced, according to Remit Consulting, a data company.

Real estate analysts said the amount of available space is likely to have fallen further since March, with employers and developers expecting a more flexible future of work, in which less space will be needed to accommodate an equal workforce.

“Our view is that we do not need as much office space in the UK or anywhere else as high levels of agile work remain. . . it’s reasonable to say [reduction in space] is a forward trend and a trend that needs to happen, ”said Mat Oakley, head of European commercial real estate research at real estate company Savills.

The company predicted that flexible work would continue after the pandemic, which would make as many as one in every 10 offices exceed requirements over five years. This is likely to push older offices, which no longer meet the demands of a modern employer or strict environmental standards, into excessive pressure, Oakley said.

“Some stocks are no longer fit for purpose; in some places it is not viable to make it purposeful, ”he said.

The decline in office space was more pronounced in smaller cities and away from central business districts, according to Boodle Hatfield, a law firm that analyzed the VOA data.

The area of ​​office space in Greater London generally fell by 3 per cent in the year to 31 March, but in the outskirts of London the drop was more than twice as much.

David Rawlence, an associate at Boodle Hatfield, said coronavirus “shook up the commercial real estate landscape” and encouraged some companies to move out of office blocks altogether, preferring to save on rent instead by capitalize on the rise of homework during the pandemic.

The effort to dismantle offices and convert them into housing was driven “by the unique circumstances during the telecommuting pandemic and the government’s move to expand permitted development rules, making the change from commercial to residential use possible with minimal planning consent ”. he added.

Both Oakley and Rawlence predicted that better-equipped, modern offices would continue to attract demand, with older blocks more likely to be candidates for conversion to other uses, such as housing.

“Businesses are increasingly looking for high-specific office space with all the modern disadvantages of attracting workers back to the office,” Rawlence said.

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