Colliers predicts London office vacancy will hit 10% in 2021

Vacancy rates across London’s offices are set to hit levels not seen in a decade during the first half of 2021, Colliers International has reported. The agent expects the vacancy rate to reach 10% in 2021 and poor quality office space to be left on the market inflating vacancy levels in to 2022. Colliers added that office space availability in London has risen by 30% in 2020, of which 1.8m sq ft has been second-hand tenant space put onto the market since April. This second-hand space accounts for 31% of all available space in the capital. Colliers also expects rents to rebase next year. By the fourth quarter next year it is predicting average rents to have fallen from £58 per sq ft to £53.50 in the City, from £75 per sq ft to £69.50 per sq ft in the West End and from £57 per sq ft to £52 per sq ft in the City fringe. “The space that doesn’t meet high standards or provide any USP for the occupier will drift further out, with rents taking a bigger hit,” said James Walker, head of City agency at Colliers International. “Creating an offer that is different, flexible and exciting will be crucial to attracting the attention of prospective occupiers. Those landlords who can demonstrate they have learnt from the last year in terms of what their customers want will be a step ahead.” Stuart Melrose, head of occupier advisory, London, at Colliers International, added: “Judging on the current sentiment, it would be no surprise if the pandemic causes occupiers to re-evaluate their portfolios and reduce office space. However it may well be that they end up retaining their space but reconfiguring the layout to work with a reduced density.” To send feedback, e-mail louise.dransfield@egi.co.uk or tweet @DransfieldL or @estatesgazette Photo © Guillaume Meurice/Pexels