Tom Wildash, Co-Head of West End Leasing at Colliers, comments: “The increased number of requirements we have seen in the first quarter of the year is indicative of a changing shift in sentiment towards the office. The prevailing belief from this time last year that the office is dead is weakening with every week of home working.
“Occupiers and landlords alike are now taking time to review their office portfolios in the light of COVID-19. We expect to see redesigns, lower density and greater employee engagement in fit-out plans. While office take-up over the next 12 months will be below trend, there is every reason to expect a surge in demand as 2021 progresses, relative to current levels. Encouragingly, some occupiers are looking to increase footprints rather than consolidate, in order to actualise new office designs.”
This increase in requirements is coupled with a fall in the amount of tenant space being brought to the market. While levels surged in January 2021 with over 370,000 sq ft released to the market, the highest release of space since June 2020 according to Colliers, February numbers fell to 250,000 sq ft and in the first half of March just 30,000 sq ft came to the market. As a result, overall levels of vacancy have stabilised, rising by just 8% in the year-to-date. City and West End levels have only risen modestly in 2021 to date, smoothed by take-up of over 150,000 sq ft of sublease space, something few commentators expected at the turn of the year.
Guy Grantham, director in the Research & Forecasting team at Colliers, adds: “Tenant-release space has been the main driver of elevated availability across London since the start of the pandemic. However, availability will fall steadily in H2 2021 but may remain stubbornly above trend due to a proliferation of poorer quality non retro-fitted space, where landlords are reluctant or unable to refit secondary stock. There will continue to be a flight to quality as best in class buildings appeal to occupiers who want to create the best environment for their staff.”