City of London Corporation on track to meet surge in demand for high quality office space
The City of London Corporation are exploring a new policy approach to ensure business demand for quality office space can be met over the coming years.
The change comes after a number of recommendations made by Property Consultants Arup, and Knight Frank in a report on the future of office space commissioned by the City Corporation. It has anticipated a potential need of up to 1.9m sqm of additional office space, up to 2042, needed to meet rising business demand as the City continues to recover from the pandemic.
The City Corporation has observed a ‘flight to quality’ among building tenants seeking a new quality of space, in order to encourage workers back to the office. Employers are also placing greater value on buildings with ‘best-in-class’ sustainability credentials, provision of meeting spaces, good access to amenities, as well as quality design which communicates the company’s brand and values.
Included in the recommendations and welcomed by the Local Plan Sub-Committee, is a policy approach that seeks to retain office stock for which there is demand, while introducing a ‘retrofit fast-track’ planning approach. This would apply to applications that improve the environmental performance of buildings, while introducing a greater mix of uses (including hotels, cultural destinations, or education uses) to parts of the City.
It is anticipated that workers will continue to return to the office, with the number of people coming into the city each day, mid-week, at 80% of 2019 levels and 65% for Mondays and Fridays. As this to continues to rise, and as employment and job numbers in the City continue to grow – in line with Greater London Authority projections – the City Corporation expects to see significant increasing demand for high quality, sustainable offices in the Square Mile.
Chairman of the City of London Corporation’s Planning and Transport Committee, Shravan Joshi, said:
“I welcome the report’s findings which show that we are not only on the right track to meeting the amount of office space demand in the City, but also delivering the right type of space. We are keen to entice workers back into the City on weekdays, with a vibrant and dynamic working environment.
“Our Destination City programme recognises the important contribution that the Square Mile’s employers and workers will have. Over the average seven-day week now, the City’s total footfall is 80% of pre-pandemic levels and with the coming increase in office floorspace and new attractions, this is projected to continue to rise.”
Director of Arup’s City Economics team, Matthew Dillon, said:
“Employers are really favouring 'best in class' offices; those with high environmental performance, lower densities, and fantastic amenities outside the office door, and the City is well-placed to exploit this.
“Whilst there might be some headwinds for the office market in the next few years, as employers right-size their real estate portfolio as leases end, the longer-term prospects for the City office market are good, driven by employment growth in high value industries, the return to the office, and the desire for lower carbon footprints.”
Partner and Head of Knight Frank’s London Development team, Andrew Tyler, said:
“Employers must deliver the very best workplace experience and amenities for their staff in a more flexible hybrid environment, while at the same time become more sustainable to meet their ESG and Net Zero objectives.
“Our recent (Y)OURSPACE research shows that 47% of multi-national firms are looking to replace their corporate HQ in the next three years, with talent attraction and retention their top priority.
“This ‘flight to quality’ is driving a supply shortage and competition for the very best space, while also leaving older buildings at risk of becoming stranded assets and requiring significant upgrades. The City needs to be able to quickly deliver more of what works best for employers and create the right conditions for the upgrading and retrofitting of older office stock.”