One of the results of the pandemic will be the large amount of second-hand office space that will become available.|
Tenants with long-term leases will look to sub-let surplus space, and tenants will look to downsize within their existing accommodation or relocate once their leases do end. It is inevitable that rent free periods will increase, incentives will be on offer and rents will fall.
It seems logical that with large amounts of second-hand space available that there will be less appetite for new build. However, new builds will continue if they can be funded off the back of the reduced rent levels that may occur going forward.
In a similar way, our high streets will need to be fundamentally rethought as there are simply going to be a lot fewer retail occupiers.
So, what will be the focus going forward?
It is more likely that investment will occur relating to existing space rather than new space, and that investor funds will want to reposition their portfolios. Many will find good opportunities going forward in used office space in certain locations.
I believe that good central city offices will retain their status. These buildings already have good occupiers and the majority will remain, albeit perhaps occupying less space. Many other aspirational tenants would be happy to be in those same buildings if space became available at rates they could then afford.
More peripheral older offices may take longer to re-let but could present great opportunity for the right tenant. However, much more thought and consideration will need to be made when deciding how to reconfigure and repurpose these buildings. In certain cases, change of use might even be necessary – e.g. from office space to residential accommodation.
In relation to many buildings the fact that there is vacant space may give rise to opportunities to reposition the building in the market.
Good buildings will always be let but what constitutes good going forward may be different to what exist now.
In my opinion, it is likely to be the case and so attention will need to be given to:
- Mechanical services, particularly air filtration and circulation
- Lift speeds and capacity including card operation
- Large spacious receptions
- Certifiable and effective fire precautions
- Exemplary energy efficiency standards
- Accessible cycle storage and shower facilities
- Internet connectivity
- Automation of doors and security
On the office floors themselves again, a slightly different mindset might be required:
- Perhaps, more individual toilets
- Open plan flexibility
- Flexible kitchen/tea station locations
- Breakout space
- Larger meeting rooms
- Proximity door releases
- Flexible power and IT.
It may be that many buildings will find it difficult to tick these boxes going forward. These will be the buildings where more fundamental repurposing may be necessary.
An existing building immediately presents restrictions because the floor to ceiling heights, cladding, cores and staircases are set.
Nevertheless, much can be done to modify buildings to suit the new circumstances.
I would take the view that those practices that focus on working with and understanding existing buildings will be in a good position to advise how existing buildings might be adapted in the future.
It is, of course, the case that some buildings will never be able to be economically altered to suit future purposes. Here, of course, redevelopment may well be the best option. However, where possible the most sustainable way forward is to use the existing structure and to repurpose it. It is always the case that it is quicker to refurbish than to rebuild simply knowing that there is no sub-ground foundation or structural work to undertake. Furthermore, there has been increasing flexibility in planning law and simplified consent for even quite substantial changes.
In immediate future, our view is that there is a strong case that leasing and investing in existing space will take precedent over new developments in many city centres.
To discuss this article with Roger, please email him at email@example.com, or call him on 07775 944662.