COMMENT London’s locked-down streets were quieter than ever during 2020. The “race for space” (from a residential, if not commercial perspective), the rise of virtual and the volatile employment market made for an uncertain future. The success of home working, London’s dependence on public transport and general economic uncertainty led many organisations to delay real estate decisions. The resulting impact proved fatal for many small businesses which relied on the footfall of London’s previously burgeoning office market.
But London is nothing if not resilient and some 18 months on from the start of the pandemic, it is on its way back, but arguably with a greater appreciation of community.
If London is to continue to attract people, business and investment, it needs to be more than it was before. With many people having enjoyed the experience of getting to know their neighbourhoods better as a result of homeworking during the pandemic, London needs to offer an alternative version of “neighbourhood”, bringing a sense of community that will entice people back. The independent restaurant, the sandwich shop, the café; it is not just about glass-fronted tower blocks. London needs to create a stronger connection with its communities, a more tangible link between its residents, its workers and its businesses of all sizes. The question is not should, but how?
Much has been written about the return of residential in our city centres and the need for a better blend of accommodation types at all price points but, as confidence creeps back into the market and workers and residents assess their options, there is both opportunity and risk in the London market.
The opportunity to snap up redundant office and retail space to target the rental market is certainly attracting attention, as shown by the £2.3bn invested in build-to-rent in the first half of 2021, a 79.8% increase on the period a year earlier, according to Knight Frank. Data from Molior London also showed that BTR accounted for a third of new homes sold in London in Q2 this year, up from 15% the previous quarter. Throw in the fact that Londoners purchased 61,830 homes outside the capital during the first six months of this year, and it is clear that the balance in demand between home ownership and rental in the city is shifting. With later living and affordable living spaces also offering new high-spec rental options for a range of demographics, the future shape of city living will at the very least be more diverse.
With offers of coffee and doughnuts, free parking and discounted lunches, the drive to get people back into the office has, for many businesses, been more carrot than stick. A “big bang” return is unlikely and, to a large extent, unjustified. Many of us have operated successfully from home over recent months, dispelling once and for all the myth of presenteeism. But as we look to revive our office cultures, renew our business relationships and resuscitate the small businesses reliant on office worker trade, thought needs to be given to the lessons learned from the past 18 months: what have we enjoyed from working at home and what have we missed from working at the office?
Having signed a prelet for a new London office just before Covid hit, we were forced – and had the luxury – to consider afresh how we use our office space so that it offers our teams an attractive alternative to homeworking. That’s not to say we wanted to compete with it, rather that we wanted to embrace those benefits homeworking cannot provide. We wanted to give our employees a reason to “want” to come back into the office.
If offices are to have a future, we need to understand and embrace the altered needs of our employees and reshape our working structures accordingly. If our workers are demanding sustainability features, a commitment to biodiversity, public realm, more green space, cycle lanes and pathways, then our offices and business districts need to respond accordingly. When looking at it through such a lens, it is clear that now is a transformative time for the office sector and a huge opportunity to reconfigure our offices as places to meet rather than just places to work.
Despite office vacancy rates hitting a 10-year high in summer 2021, Q2 was the busiest quarter for office take-up since the crisis began. There were also around 680 lease completions and 40-plus sales of properties of more than 100,000 sq ft in the past 12 months. All of which suggests that the London office market is continuing to attract investors and occupiers keen to embrace the brave new office-based world.
While the general view throughout the pandemic was that our town and city centres were oversubscribed to retail, what is often overlooked is the opportunity to improve accessibility for entrepreneurs and start-ups, as well as to reshape the land and buildings to better serve our communities. The opportunity to build stronger relationships and understanding between public and private property owners and community leaders could help develop a greater bond between businesses, workers and residents and bring a greater sense of “neighbourhood” to the city.
Out of adversity comes opportunity, and as investment flows into London again, a new London is emerging, powered by a new sense of community at its heart.
Joseph Mazzucca is partner and head of London at Shoosmiths
