Demand for office space soared last month as businesses feel more certain
Business owners making enquiries about leasing office space exceeded pre-pandemic levels last month, in a boost for the revival of city centres.
Demand was 54 per cent higher last month than in January 2021 and 15 per cent higher than in January 2020, just before the pandemic hit.
The office sector had the strongest growth in enquiries of any sector at the start of 2022, Knight Frank said.
It comes as City workers have flocked back to the Square Mile in recent weeks, when work-from-home messaging was eased.
Knight Frank said firms were signing up to longer leases as they feel confident in committing to hybrid working policies and have future-proofed staff’s working patterns.
Last year, many firms delayed making concrete decisions on future office requirements due to anxiety over Covid. Now, businesses have entered the new year with a renewed sense of certainty and have been contacting agents and landlords.
Some firms are planning to slash their office space requirements, while others are looking for a similar or larger square footage as workers return to their desks.
Director of Rightmove Commercial, Alex Solomon, said businesses had moved on from a “wait and see approach” and were making new routines.
“The office sector has taken a knock since the pandemic started, with businesses cancelling their contracts, or downsizing, and there has been much talk of working from home becoming a permanent fixture for many companies,” he added.
“Although some businesses have decided to move to fully remote working, there are a large number introducing a hybrid policy with office working a few days a week, and others who would prefer their employees to be in five days a week.”
Bigger cities will take longer to recover but there are green shoots of recovery, Solomon said.
The London market has seen five consecutive quarters of improving take-up, Lee Elliott, head of global occupier research at Knight Frank, remarked.
There is currently 3m sq ft of space under offer and 7.5m sq ft of active demand from occupiers seeking space within the next six to nine months.
Elliott added: “A number of factors are propelling the market.Business sentiment in terms of headcount and revenue growth is now well beyond pre-pandemic levels. There is a sense of both an imminent shift from pandemic to endemic and that we will live with Covid in some shape for longer, and so a more progressive agenda is emerging.”