The Importance of Surrounding Amenities to London Offices
Posted by Colliers on 12th November 2021 -
Much has been written about the return to the office and particular attention has been paid to London with many naysayers predicting the end of the high-rise office building and the long commute.
However these headlines have little relation to investor sentiment. What is more important to them is not the height or layout of the property, but the closeness of amenity and a sense of life about the asset and the area.
London’s office community has long been tied to the bars and restaurants of the capital and it has become even more symbiotic as we return after the pandemic. The hub of the West End, St James’s Street and Grosvenor Street, is thriving as business have returned and there’s been a very visible knock on effect on local pubs and restaurants. There has been an influx of new occupiers; firms that are seeking replacement offices to entice their staff back to the office, in particular in busy locations where staff want to be. With limited supply, I expect the West End will continue to flourish - but only for the right building.
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The City is opening slowly and more cautiously with surrounding businesses being hit harder by lockdown and the lack of working population, but the delayed opening of the Elizabeth Line could be its saviour. As rents rise and supply dwindles in the West, the migration of tenants will continue; especially from those who get excited by good sustainability credentials and swift transport connections. Both are particularly attractive to occupiers who have implemented a “three days in the office” trend and in time expect a similar bounce for certain transport links that provide access to the City too.
Capital is also re-evaluating and on the move as restrictions open up and business travel starts to return. Germans can now get to the UK, as can the Americans, Canadians and the Swiss without quarantine on return. Singapore and Hong Kong is green for entry but, like Korea, enforces quarantine on return. Japan remains closed but both Korean and Japanese groups are now empowering ‘local’ offices to do their work. In some instances, these offices are located in the US which gives an indication of the desperate sense not to miss out. London, thanks to a bumpy five years following the Brexit vote, now seems the place for value.
Whilst such nervousness is natural, I believe that for certain products, this could be the most exciting time to acquire a London property since the global financial crisis and it won’t be long until investors realise that. There will of course be some prospects that are more attractive than others; think strong ESG credentials, larger lot sizes and those that sit amongst the bustling amenities mentioned above. However, for investors willing to be flexible and have a clear vision for the future of work, there is plenty of opportunity in London and the conditions for investing could hardly be better.
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