The UK could see a 15-20% reduction in office space as occupiers adapt to post-pandemic working patterns, according to a survey undertaken by Lambert Smith Hampton (LSH).
Although the firm’s survey of UK office occupiers found “evidence of a tangible increase in office attendance” over the last year, occupancy levels are still well below pre-pandemic levels and occupiers are moving towards less, but higher quality, space.
Thirty five per cent of survey respondents said they had already relocated or consolidated space since the pandemic and a further 20% said they would make a decision on their next lease event.
Of those respondents who had already moved, the most common reduction in space requirements was around 30%, which was cited by just under a fifth of survey respondents.
Some 73% of survey respondents said office attendance levels had increased over the last 12 months, with workers typically coming back to the office for three days a week – an improvement on last year’s survey when two days a week was the most popular answer.
Smaller companies reported higher attendance levels, with 47% of companies with fewer than 50 employees seeing staff come into the office at least four days a week. The only firms that reported full attendance were in this size category.
Oliver du Sautoy, head of research at LSH, said: “While hybrid working is here to stay, the increase in attendance levels over the last year has banished any remaining thoughts that the ‘death of the office’ would be triggered. Offices still have a fundamental role to play in the day-to-day operations of many businesses; particularly smaller firms, a significant number of whom have seen attendance return close to pre-pandemic rates.”
Ryan Dean, head of national office advisory at LSH, added: “While our survey results suggest that UK office markets need to become leaner, this is on a scale that could be achieved relatively organically via the gradual loss of poorer quality buildings from the stock. As hybrid working practices evolve, firms will continue to strive to find an optimal balance between the size, cost, quality and location of offices, and this will drive occupier market activity going ahead.”
Charlie Lake, capital markets director at LSH, said: “With occupiers exchanging quantity for quality, the emerging opportunity for investors and landlords is the repositioning of existing assets to align with changed occupier expectations. In many UK towns and cities, repositioning projects will provide the first truly post-COVID office space in the market. First-mover advantage will go to amenity-rich multi-let offices with best-in-class ESG credentials that are fully designed to accommodate hybrid working practices.”
