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Office vacancy rate at almost double pre-pandemic

24th August 2021

The vacancy rate of London offices has almost doubled since the beginning of the pandemic, reaching approximately 9% at the end of Q2 2021.

Since the easing of COVID-19 restrictions over the summer, many workers have started to return to their offices once again.

However, recent data from Remit Consulting indicates that London offices are not being used by businesses in the same way. Some seem to not even be using them at all.

Almost one in every ten London offices has been identified as vacant, suggesting that office demand has fallen drastically since before the start of the pandemic, at which time the market was noticeably buoyant.

Whilst this may be a worrying sign for office landlords, these figures are potentially more useful in highlighting the lack of certainty in physical office use whilst the pandemic is still at the forefront of day-to-day lives. Indeed, not many wish to commit to paying for a new commercial premises at a time when another lockdown or further restrictions may prevent its use.

Similarly, as many have predicted over the last 18 months, the majority of businesses seem unclear on their own working habits going forwards. Some have established a hybrid working pattern amongst staff members. However, for most companies, this commitment could significantly influence the size and quality of space required.

Many are therefore opting to sit tight and extend current leases or commit to remote working until their strategy is clear.

This thinking is confirmed in additional data metrics, which highlights how London workplaces, on average, were operating at around 11.5% capacity in the week ending the 6th of August.

However, this market climate could be beneficial to prospective commercial tenants.

Landlords may be more likely to commit to greater rent reductions and incentives, whilst offering greater lease flexibility, as they will be forced to compete with the abundance of comparable options available to tenants across the market.

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