The “black swan” event of Covid has revolutionised the way in which the traditional office is viewed, according to a brand-new report by global property consultancy Knight Frank.
The UK Cities report, which is published today, expands on Knight Frank’s recent ground-breaking (Y)OUR SPACE report, suggesting that the past 20 pandemic-dominated months have led to occupiers radically rethinking what they want – and need – from a modern office.
Knight Frank has Yorkshire offices in Leeds, Sheffield and Harrogate.
In this report Dr Lee Elliott, Partner and Knight Frank’s global head of occupier research, explains that occupiers are now repurposing their offices in key ways.
He comments: “The virus has led individuals and companies to question their purpose. In so doing, some of the mainstays and orthodoxies of pre-pandemic life are undergoing a fundamental re-evaluation.
“Whether it is the structure of the working week or day, the balance between work and personal life, the effect of our working lives on our mental and physical health, the sustainability of commuting, or the office as the central place of work, all are in the analytical spotlight.”
But Dr Elliott is adamant that this fundamental re-evaluation will not lead to the death of the office.
“The hyperbole and sensationalism of the mainstream press, who conflated a relatively short-period of enforced working from home with the long-term death of the office, increasingly appears wide of the mark.
“While occupiers have naturally been slower to make real estate decisions, few have taken the knife to their occupied portfolios with anywhere near the ferocity feared in the early months of the crisis.
“Instead there has been a flight to qualityacross all UK cities, as occupiers seek office space that is both attractive to staff and compelling relative to alternative work settings, such as home. The office increasingly needs to provide its occupants with more than they can obtain elsewhere.
“So the flight to quality is synonymous with a flight to amenity rich buildings particularly related to health and personal wellbeing. Whilst a single office building cannot feasibly provide all such amenities, they can be delivered within a managed estate or within the boundaries of a micro-market.
“It is significant that occupiers have recognised that the simplistic reduction of quantum of space is not effective and can actually create environments and experiences that are sub-optimal for staff and their productivity. It appears the approach is instead focused around maximising the return on investment an occupier makes when taking a lease.
This supports the provision of a more compelling and attractive office, but also requires the space to be more intensely and more consistently utilised. Consequently, occupiers are reconfiguring office space towards:
- A more compelling environment AND experience
- A more heavily utilised and productive space
- Placing greater emphasis on collaborative rather than private work-spaces
Looking specifically at the Leeds office market, Knight Frank Partner and Head of office agency Eamon Fox added: “The death of the office in Leeds is a myth. The market has proved incredibly resilient in the midst of the pandemic and I am looking forward to 2022 with genuine optimism.
“Headline rents are currently £34 per sq ft and, all being well, I can see them hitting £36 per sq ft by the last quarter of next year, given the high standard of some of the new office space which is coming on to the market. There is a flight to quality, which has accelerated during the past 12 months, as occupiers look for space in which employees feel comfortable and safe.
“The long-awaited arrival of Channel 4 in Leeds has proved to be a tremendous boost to the city, underlining its potential. The knock-on effect is already being felt with Leeds becoming a magnet for bright young tech, media and creative companies, with state-of-the-art buildings such as Platform, 1 City Square, 34 Boar Lane and Concordia Works welcoming some of the best in class. The education and academic sector will also have an increasingly strong presence in the city centre, with students moving in from the universities for vocational reasons.
“2022 promises so much. MRP’s City Square House, next to the station, is going to be another game-changer, with 83,000 sq ft already pre-let to leading global law firm DLA Piper, but there is still another 55,000 sq ft of Grade A brand-new office space still available. Meanwhile prestigious developments by Bruntwood, Boultbee Brooks, Kinrise, CEG and Opus North will underline Leeds’s burgeoning reputation as the most progressive city in the north of England.
“2022 will be the year of the true pre-let. There are a number already in the making and there will be some wonderful news to share very soon.”
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