Ray of hope for London office market

Cushman & Wakefield anticipate renewed activity in H2 2012

Article posted: 28 Nov 2011

According to the latest report from Cushman and Wakefield, following diminshed levels of take-up in London’s office market this year, renewed activity is expected in second half of 2012 with the market for office space in areas such as Clerkenwell and Shoreditch, EC1 and EC2 to benefit most from the relocation of businesses from office space in the West End.

With companies adopting a 'wait-and-see' attitude towards property decisions in 2011, it is expected that the market for office space in London will benefit from some of the resulting pent-up demand next year. When asked about their organisation's strategy in 2012, just under half of London companies (49%) described it as one of opportunistic growth and just under one-fifth (17%) will be looking for aggressive growth.

The national survey, carried out by Lighthouse Global amongst 500 of the UK's largest companies, of which 213 have a London head office, shows that businesses are scrutinising their real estate strategies for ways to use property more efficiently. Over a third (40%) of the London-based companies surveyed have a turnover in excess of £500m.

London as a location remains a key aspect to successful business strategy. Over three-quarters (77%) of businesses with a London head office view it as important to be situated in the city, and of them, over half (52%) consider it ‘extremely important’. However, over one fifth (21%) believe that London’s position as a global centre is likely to come under threat, and a further 24% are undecided about London’s future as a pre-eminent global centre.

Given the uncertain market outlook, the study shows that it is more important than ever to align real estate decisions with the wider needs of the business, with flexibility and efficiency the overriding priorities for 2012. The clear message is of occupiers looking to drive their use of office space harder. Despite anticipation of increasing revenues and some increases in employment, only 17% anticipated an increase in floorspace over the next year. Working practices are being reviewed with 72% of respondents likely to introduce flexible working practices to use existing space in more efficient ways.

George Roberts, Head of London Occupier Representation at Cushman & Wakefield, says, "Occupiers are looking for real estate to support their corporate aims, primarily by seeking to work their space harder. This is a key trend that we are seeing across all business sectors. Longer term, developers and owners of real estate need to go further in providing buildings that meet the demand for more intensive use of space."

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Posted by Julie