The reality of the market right now
We can all agree it’s a bit of a strange time at the moment, and it would be slightly naive, not to mention dishonest of us, to say otherwise.
But, we’re seeing a few things float around about the market which aren’t necessarily accurate, so we thought we’d share some honest advice on how everything is looking, what clients are asking for, and importantly, how this relates to costs.
Last week we were jargon-busting, now we’re myth-busting.
👉 Myth 1
Everyone is still working from home loads, so office space must be pretty cheap, right?
There seems to be an assumption at the moment that landlords must be desperate for occupiers to come in and take space. However, we’re seeing take-up of the best workspaces remain really strong, especially here in London, and offices which hit the right spot - whether that’s in terms of amenities, size, location etc - are in high demand and will likely continue to be so.
We spoke with Landsec, who looked at office attendance across their London portfolio, and although it comes as no surprise that attendance is down compared to pre-Covid levels, take-up during Tues-Thurs was at 74% in June 2023 (85% pre-Covid), and Mon-Fri at 62% (75% pre-Covid).
Leasing Director Harry Foster confirmed “Our portfolio is typified by being located close to main transport hubs, buildings are generally new or recently refurbished, and they benefit from being highly amenitised delivering an all-day experience. All of this means our customers have found it relatively easy to bring staff back to the office.”
But, we do get that budgets are tight and people want the best deals. Interestingly post-Covid we’ve seen a lot of our clients choose top-tier offices even if it means they’re paying slightly more than they would be a few years ago; a point discussed by our CEO James Townsend when he was invited onto the Wear Many Hats podcast.
Needless to say the same rule applies here as it does with the cost increases amongst everything else right now - the property market sadly isn’t immune, but it doesn’t mean you can’t get an amazing space which encourages collaboration, creativity, and growth. Far from it!
👉 Myth 2
Say we want to be in the West End, we’re going to have to pay loads more to get the spot we want, surely?
If we’re using the West End as an example, this area is becoming really well-occupied. Prices are higher but we’re seeing clients pay them as it’s now deemed a real destination spot.
But, that doesn’t mean you’re going to have to pay loads more if you want to relocate here.
If you’re having a bit of a growth spurt then a smaller office can be an attractive option if you’re set on being in a specific location.
Sometimes (big disclaimer), you could get a bigger space if you’re willing to compromise on the provider, or the quality. When we say this we don’t mean you’ll have to go from a best-in-class space to somewhere completely basic (obviously not our style), but compromising on amenities or levels of fit-out could be a way to get costs down if you want to size up.
Another thing we’re seeing is spill-out into nearby areas - For example, Holborn becoming a go-to as the West End fills up. There are a lot more options out there, so try looking outside your go-to bubble and you might be surprised at what you find!
👉 Myth 3
Maybe some locations aren’t as expensive as others, but London is really pricey overall at the moment…
Sadly, as tends to be the case with capital Cities, prices in London are high - always have been and likely always will be. There’s not much we can do about that (as much as we’d love to).
However, as mentioned further up, exploring somewhere new or compromising on the spec can really help bring costs down; it’s not always about downsizing. Plus, as we have access to the whole market, we can unlock tons of desirable options well within budget, and do regular benchmarking exercises to ensure you’re not getting ripped off.
It’s also important to note if you’re looking for a more long-term solution, opting for a leased office means you could get something bigger to pre-empt future growth, compared to a flexible office. But as always, it’s dependent on several factors unique to your business.
👉 Myth 4
There’s no point investing in our office space as we still have so many virtual meetings - it’ll save us money.
If you look at it in black and white, of course.
But if you think about the bigger picture, no.
Even if you’re still having loads of virtual meetings, we’ve really seen clients reap the rewards of doing more in-person sessions where creativity can flourish and communication can be seamless.
Having to spend money on separate meeting space really adds up, so even if it doesn’t feel like it now, expanding to include meeting, hosting, or just generally more space is likely to financially benefit you in the long run.
When we visited Courier Media earlier in the year, their MD Cain Fleming spoke of how building communal areas really encouraged people to come in more.
Finally, perks like company breakfasts and dedicated meeting space are usually included with a lot of flexible office providers, as well as getting access to their wider portfolio of properties.
So you aren’t chained to one place, can explore other buildings in which to host, and ultimately it’s all part of the price you’re already paying.
If we had to summarise, we’d say yes people are paying more overall, but it’s for best-in-class space, and there are so many benefits to exploring different locations, providers, specs of offices; the lot.
Like many other things it’s not black and white, but we can help you make an informed decision or give you that extra bit of clarity if you’re not sure what to believe.