On January 21, 2020, the Financial Times published the blog, “Sky is the limit for London office rents.” Fast-forward three years later those words are treading on shaky ground.
Democratization drives the office market
Two months after that blog was published the world shut down. The office market cratered and work from home became the norm. Three years later we see that hybrid work environments are now commonplace across the globe and office real estate participants are faced with “having a lot of conversations where people are reevaluating what needs to be done”, says Nick Oddy from ISG.
During a panel session on Investment in the New Workplace at MIPIM 2023 in Cannes France, industry experts provided their thoughts on the new workplace environment in London.
Donald Choi, CEO of development giant ChinaChem, based out of Hong Kong has begun to diversify his portfolio by looking for opportunities in the office market in London. In his evaluation of the London market, he noted that while there is a lot of supply and office has been slower to recover than other industries coming out of the Covid pandemic, he remains optimistic and has a different take. “Covid has accelerated the democratization of the workplace”, says Choi. Large companies looking for new and vacant office space in the city are turning to employees, office owners, and developers to find ways to activate their buildings so they can bring their talent back into the city center.
Talent Talent Talent
The ecosystem we have got in the city is one that tends to draw skills and experience and create those centers of excellence – Shravan Joshi MBE, Chairman of Planning & Transportation, City of London Corporation
Chairman of Planning & Transportation, City of London Corporation, Shravan Joshi MBE, noted that “the ecosystem we have got in the city is one that tends to draw skills and experience and create those centers of excellence.”
For the investment required from developers to create those “centers of excellence” in the London office market to pay off, a commitment from tenant’s talented workers to return in droves must be reached. But first, the talent needs new spaces that cultivate a healthier space to work. Donald Choi of ChinaChem remarked that his company has begun a transformation. “We want to use our expertise to create a more vibrant and sustainable community in the city of London to ensure that we leave the world a better place.”
No longer can office space be thought of as an enclosed environment. They need to be designed as open nodes that connect its users to each other through healthy experiences that drive efficiency and mental and physical well-being.
Experiences for the future
The people are making different choices and moving away from conventional methods – Nick Oddy, ISG
As for the type of experiences that will activate office space, it is clear from the panel that a new way of imagining the work place experience must be designed. “The people are making different choices and moving away from conventional methods”, said Nick Oddy from ISG. Whether it is working from comfy shared spaces, enjoying a 30 minute virtual golf outing with coworkers in your office building, or working in natural light and open air spaces, it’s never been clearer that experiences will be the main drivers for a return to the office and a return to possibly “sky high rents”.
Article written by Seth Gergel, University of San Diego MBA & MSRE Candidate ‘23.
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