Clouds Lift Over City Of London Offices As Suburbs Fall Out Of Favour
Suburbs are out, cities are in. Including the City of London.
Two data drops — one from CBRE, the other from Cushman & Wakefield — show that London is quickly recovering its workplace vibe.
The change is being driven by office workers' “live, work, shop” aspirations and a refocus on the business and social potential of city centre workspace.
Analysis by CBRE found that 74% of hybrid workers in the UK would prefer to live within a 30-minute commute of their workplace. CBRE said this is an abrupt turnaround from the urban-phobic preferences of the pandemic years, representing a shift of sentiment away from the suburbs.
The 2022 data contrasts with strong residential preference for commuter towns like St Albans, High Wycombe and Woking.
CBRE posit that high city centre pricing may be keeping potential urban settlers living in the suburbs since the data shows a gap between what office workers seem to want and what they have. Fifty-seven percent of those surveyed live within a desired 30-minute commute zone of their workplace compared to the 64% currently working in a hybrid pattern and the 72% who identified as wanting to work in a hybrid pattern.
The data lands as Cushman & Wakefield record a surge in businesses returning to Central London.
The consultancy said there were 63 new market entrants in 2022, slightly up on 2021 and the best year for new businesses since 2013. This equated to 735K SF of additional demand into the market. Some 33 of these businesses were moving into Central London from elsewhere in the UK, including 19 who relocated from within Greater London, adding up to 215K SF.
Existing London businesses grew their footprints in 2022: 377 existing Central London occupiers upped their space, adding new offices or increasing existing bases. This equated to a net growth of 4.6M SF of office floorspace.
Cushman & Wakefield say 2022 saw 590 Central London office transactions over 5K SF, nearly 60% up on the disappointing results in 2021.
London occupiers are increasingly likely to move around the capital as well. In 2022, 339 occupiers relocated to different premises within Central London, the largest number since 2015. Of these, 187 relocated to a new submarket, with Clerkenwell and Fitzrovia particularly popular, scoring 28 and 25 relocations respectively.
The largest volume of movers went into the City Core (95) — 27 relocated and 68 were existing occupiers staying in the area. This was close to double the movements that took place in 2021 and much closer to 2019's pre-pandemic performance.
"While the current economic outlook is more uncertain, concerns about a structural reduction in occupier take-up in Central London have receded," Cushman & Wakefield Head of UK Offices Ben Cullen said. "A greater number have been expanding their footprints. Combined with a record number of new entrants to the market, it is evident that occupiers continue to see value in a presence in Central London."
