UK offices: how flexible will landlords be in 2019?
2019 is likely to see a continuation of trends seen over recent years in the British office leasing market – most notably larger firms consolidating multiple office premises into fewer buildings with a smarter use of space, and smaller-to-medium-sized businesses going down the route of using flexible or serviced office spaces to expand.
Landlord flexibility outside of serviced offices was key to driving take-up in 2018, with Radius Data Exchange figures indicating average lease lengths for newly-struck deals are now 5.4 years, down from 5.6 years in 2017; as well as rent-free periods moving outwards once again.
This will again be critical to driving activity in 2019 – particularly in second-hand or grade-B space – the lease structures for which have undergone much more volatile changes than grade-A or new-build space.
2019 is likely to see a continuation of trends seen over recent years in the British office leasing market – most notably larger firms consolidating multiple office premises into fewer buildings with a smarter use of space, and smaller-to-medium-sized businesses going down the route of using flexible or serviced office spaces to expand.
Landlord flexibility outside of serviced offices was key to driving take-up in 2018, with Radius Data Exchange figures indicating average lease lengths for newly-struck deals are now 5.4 years, down from 5.6 years in 2017; as well as rent-free periods moving outwards once again.
This will again be critical to driving activity in 2019 – particularly in second-hand or grade-B space – the lease structures for which have undergone much more volatile changes than grade-A or new-build space.
New-build offices had a great 2018 – with demand for large, pre-development spaces being eminent throughout the year in both London and the regions. My hope for 2019 is that developers are confident enough to keep looking to generate those new builds which not only serve to satisfy global companies’ desire for well-located, quality, smart office premises – but also have a regenerative, refreshing effect on our cities.
See also: UK investors return to London property market undeterred by Brexit
It is critical that new development keeps happening, but, as with all recent predictions, a great deal hinges on what transpires in the negotiations between the UK and Brussels.
Crashing out of the EU without a deal would prove much more disruptive to the UK office market, as barriers to financial and professional trade (as well as global talent) would be erected overnight – and the previously agreed transition period to ease UK-based companies’ move into a different set of operational realities would be dissolved.
If demand does ease up as a result, then developers will be much more reticent to push ahead with those new projects which have served the market so well in terms of delivering positive statistics in a time of anxiety and uncertainty – which would be a tremendous shame.
To send feedback, e-mail graham.shone@egi.co.uk or tweet @GShoneEG or @estatesgazette
