EDITOR’S COMMENT Activity ground to a halt as the UK entered its first nationwide lockdown in March, with EG’s Q3 London Office Market Analysis, the most robust view of the London market using EG’s Radius Data Exchange figures, showing exactly how hard the capital was hit.
Those figures, revealed exclusively this week, show that less than 1m sq ft of London office space was let in Q3 2020, the first time figures have been below the magic one million since EG began LOMA in 2002. So far this year, a touch over 4m sq ft has been leased in the capital, less than half the long-term average for the opening three quarters of any year.
It is a dire and a depressing number. And one, which despite some positive news of activity – TikTok getting ready to take all of Helical’s 88,600 sq ft Kaleidoscope building in Farringdon, EC1, for example – probably won’t get much better by the end of the year.
Demand for offices has changed.
There’s a ridiculous statement if ever there was one. Of course it has. But, as yet, none of us can really know how it has changed. I do not believe that the office is dead, that cities are dead and that we will all want to live and work in the suburbs and never commute again.
Yes, structural change is inevitable and, as one former chancellor told me this week, unavoidable. But real estate, particularly offices, has the luxury of (some) time to adjust. The nature of the UK’s long lease structure means that unavoidable change will be delayed in its full effect.
It may take years or decades, rather than weeks and quarters.
But, as LOMA shows us, decision-making is more easily impacted. And as uncertainty about lockdowns – nationwide or region specific – continues, the desire by businesses to make hard, long decisions will continue to wane.
But as we prepare to be mostly inside our homes, mostly away from our families, friends and colleagues, and definitely away from a cosy pub lunch, for (at least) a month, I was determined to share a few reasons to be cheerful.
So here goes.
1. Last week we celebrated the 16th annual and first virtual EG Awards and it was ace. If you missed it, shame on you. I got to fly through a digital metropolis, the winner of our individual superhero award Robert Adams from Colliers International got turned into his very own comic book character by EG’s multi-talented Jess Harrold, and in our bloopers reel you almost got to hear Knight Frank’s Alistair Elliott drop the F bomb (surely not at KF!). And we, of course, celebrated the big deals, the rising stars and the very best businesses in the sector. Congrats to everyone.
2. Home REIT, the specialist investment REIT set up to buy homes to house the homeless, has got off to a flying start and is already investing money that could help find a warm bed for the growing numbers of people having to sleep rough every day. Read this week’s EG Interview to find out more about the business and how profit, purpose and property are not mutually exclusive.
3. The BTR market continues to boom, with Hearthstone raising cash for a £300m suburban rental housing fund and HUB vowing to double its £1bn BTR pipeline.
4. Marshmallows. Not only are they a soft, sugary treat that conjure up the warmth of a campfire, but they are also a useful metaphor for thinking about how we are going to revive our high streets. Covid-19 has created a fresh layer of challenges for our high streets, but it has also amplified the voices of those smart and many people coming up with solutions.
5. We’re Still Here. We’re still here at EG, providing you with news, analysis, data, events, a ridiculously deep library of podcasts, including We’re Still Here every Friday, and maybe even a little entertainment (see point 1).
There is no denying that lockdown 2.0 is going to be tough. UK plc will suffer, the real estate business will suffer, decisions will become harder to make and probably slower to be taken and our people will face fresh challenges, too.
But there are always reasons to be cheerful. And EG will be here for you again, just like we always are.
To send feedback, e-mail samantha.mcclary@egi.co.uk or tweet @samanthamcclary or @estatesgazette
