Insights

There is no denying that the commercial property sector, particularly in Central London, has and is still experiencing a significant shift in working trends.

Hybrid working structures combined with rising business rates has left the industry in an interesting position for the future.

According to Start Ups News: London led globally in 2023 as the premier location for coworking spaces, surpassing other major cities by over 1,000 office spaces.

Michael Iasi, Stoneway’s Head of Flexible Offices says: “The flex market has adapted to the need for grade A office space, with wellness focused amenities. More companies are now mandating employees back to the office 3-4 days a week. I expect more offices offering excellent amenities to encourage workforce return.”

Since 2019, remote and hybrid working has become a habitual pattern to work structures. We have already started to see prime office space implementing work-life balance amenities such as yoga and meditation rooms. It will be interesting to see if this can lure employees back into offices in 2024.

Despite initial issues arising post pandemic, the cost of renting top quality offices went up in the U.K in 2023.

A CITYAM article predicts 2024 will be an intensifying year for demand of quality offices, in well-connected and mixed-use areas, resulting in substantial competition and growth of rental prices.

According to Statista’s data, the West End, renowned as one of the most sought-after areas for office space, experienced a substantial percentage increase from 2019 Q4 to 2023 Q1. This surge underscores the appeal and demand for office space in this prestigious location.

The Standard conducted a study which indicates the West End to be the location to keep a watch on in the upcoming months.

This notion is supported by Toby Courtauld, of Great Portland Estates chief executive:

“Whilst macro-economic concerns and rising interest rates impacted our property valuation, the fundamentals in our leasing markets remain healthy.”

With predictions of an upward trend in demand, there will still be adjustments to the way in which the market operates.

CITYAM states:

 “Average deal lengths for [space] going under offer are now over six months…they used to be about three months.”

Stuart Simmons, Managing Director, shares his thoughts for 2024:

“As a team, Stoneway will be focusing on development sites being completed later in 2024, into the year of 2025 for larger client requirements.  Where availability of best-in-class space is limited, you must look past what is currently on the market to give clients the best chance of securing office space that meets their exact requirements.”

Despite challenges like rising business rates and evolving working patterns, the demand for quality offices in well-connected areas and the need for extra amenities is on the rise, driving competition and escalating rental prices.

Written by Olivia Hunt