For many, adapting to hybrid work patterns has been a chance to downsize and cut property costs. But it has also laid the ground for a more fundamental rethink of what the modern workplace should be, from issues such as net zero commitments and technology, to location and staff wellbeing.
While parts of the office market are contracting — analysts at Jefferies recently noted that London vacancies were at a 30-year high — there is still demand for modern, smaller central locations. There were 590 office property transactions in London in 2022, the highest number of deals on record, according to agent Cushman & Wakefield, with strongest demand for premises under 25,000 square feet, which typically accommodate about 150 staff.
Law firms including Reed Smith, Clifford Chance and Addleshaw Goddard took a record 1.5mn sq ft of space in the UK capital last year, 95 per cent of which was new or refurbished, according to agency Knight Frank. HSBC is moving its global headquarters from Canary Wharf to a more central and greener site in the City, a move that follows a similar plan in New York. US investment firm Pimco struck a multimillion-pound deal to let a brand new modern space in London’s Marylebone.
Martin Devine, at commercial real estate services company Avison Young, said workers wanted to feel part of something less mundane and so the office had “absolutely” become central to staff attraction and retention. “The pandemic really allowed people time to reflect and the post-pandemic mindset is, ‘I’m going to make decisions for me.’ People want to feel a sense of connection to the space they work in from a health perspective, a social perspective and individual perspective. And if companies don’t realise that, they’ll struggle to grow.”
The Financial Times visited three companies – Santander, Currys, and BT – that have made significant office moves to examine how workplaces are evolving.