As summer 2020 draws to a close and the UK enters a second spike, we take a look at how the pandemic has affected real estate in London’s business districts. This summer has seen politicians desperately encouraging workers back into offices and a handful of businesses who favour face-to-face communication offering bizarre /incentives to get employees back into HQs. These include company taxis so workers can avoid public transport, free food – just because – and increased provision for cyclists. As well as opening new changing rooms for cyclists, JP Morgan’s smartphone app allows directors to donate parking spots at its Canary Wharf HQ to company juniors driving in.
Despite these attempts, Monday morning in London’s “busiest” business districts is still unrecognisable. Transport for London have reported that only one third of commuters are back on the underground. These figures are supported by Morgan Stanley whose research shows that by August only one third of white-collar workers had returned to the office – far slower than their counterparts in France or Italy.
At the protest of property agents, London firms are “ditching their office space even faster than during the financial crisis” according to the latest reports from Bloomberg. Bloomberg reports than more than 1 million square metres of office space has been made available for subletting since June – the equivalent of two Gherkins. With second-hand office space offering a cheaper alternative to tenants compared to new buildings, will this spell the end of London’s building boom? The situation looks bleak for the UK’s biggest property developer, Land Securities, who own offices in the City of London, Canary Wharf and the West End. At the end of August, the firm’s shared had crashed from almost £10 earlier this year to £5.78.
As the situation grows from bad to worse, City AM reported that BP is planning to sell its entire London office at St James’. Moving to a more “hybrid” style with employees mixing working from home and working in the office means the firm will presumably take a new office which is significantly smaller. It seems likely that other firms may follow suit with countless corporations announcing the adoption of permanent work from home and flexible working policies, including the aforementioned JP Morgan. Whilst these corporations provide temperature checks for economic centres, the City and Canary Wharf, London’s tech centre – Silicon Roundabout – is also in trouble.
“The downside for London might be the dwindling of serendipity… Whilst Shoreditch never had it to Silicon Valley levels, the square mile between Shoreditch, Clerkenwell and Kings Cross has become Europe’s most serendipitous place for founders…You can’t go into Ozone (coffee shop), Granger & Co (restaurant) or Google Campus without bumping into several VCs or fellow founders.”
-Harry Briggs, a venture capitalist with Omers Ventures.
Whilst the tech sector has historically pioneered flexible working then the collaboration and networking opportunities provided by co-working spaces and business clusters kept many entrepreneurs out of the house. Now however with all key calendar events online, many founders have temporarily migrated out of London and even out of the UK.
Office providers in the area are reeling at the news that well- TechHub has filed for administration. The Times reported that the 9th July would’ve been a “blowout” party at the firm, founded by Elizabeth Varley and TechCrunch Editor-at-Large Mike Butcher, to celebrate 10 years of business. However, since the start of lockdown more than three quarters of Tech Hub’s income has disappeared, leaving only the leasehold the provider was locked into until 2024.
Elsewhere in the tech sector, news just released states facebook is working on a VR workspace, named “Infinite Office” . Whether a fad or the future, it’s likely to meet a stony reception with London’s commercial property developers.