Deloitte Makes Significant Cut To London Office Space

Professional services firm Deloitte has reduced its London office footprint by about a third in the past year, as big companies try to figure out their future space needs in a newly altered world of work. 

Deloitte has decided to exit the space it occupies at the 185K SF Hill House building, part of its office campus at New Street Square in Midtown, the Financial Times reported. That takes the space it has exited in the UK capital in the last year to 250K SF.

New Street Square was built by and is owned by Landsec. Deloitte still occupies 485K SF at the scheme, the FT said, and the company extended leases until 2036 across two buildings. 

A recent internal staff survey undertaken by Deloitte showed that its staff did not want to come in more than two days a week, leading to the decision to reduce its office footprint. 

Accountancy and professional services firms occupy a unique place in the world of London corporate tenants, making the decision to reduce space something likely to be viewed with interest. Many staff at accountancy firms, particularly in audit departments, spend a lot of time working in the offices of clients already, meaning they are less tied to the office as workers in other sectors like law or banking. 

The London office leasing market has recovered from its 2020 pandemic-induced low, but it has not recovered to pre-pandemic levels. 

Around 8.5M SF of office space was leased in central London in 2021, JLL said. That is about 80% higher than the 4.7M SF leased in 2020, but it is still only 87% of the 10-year average 9.9M SF leased. Savills is predicting 2022 should see leasing levels similar to or a bit ahead of 2021.

The FT said fellow accountancy and professional services firm BDO had also reduced its London office space, but not by as much as Deloitte. PwC said it was likely to keep its office footprint the same, although it anticipates growth in the number of staff it will employ over the next few years.