London occupiers seek flexibility and efficiency – Cushman & Wakefield
Cushman & Wakefield says there are signs of improvement in the London office market, but has warned that forward planning for leasing must become a stronger focus for companies if their property costs are not to rise.
A survey of 500 of the UK’s largest companies – of which 213 have a head office in the capital – shows that lease length has become a critical factor in decision-making, with flexibility of leases considered to be the greatest risk associated with property decisions. Respondents to the survey took an average of 21 months to consider a lease event in advance.
C&W says the market for office space in London appears set to benefit from some pent-up demand in 2012, after lower take-up levels seen this year. The survey shows that 49% of those asked expect next year to be one of ‘opportunistic growth’ while 17% say they will be seeking aggressive growth. James Young, head of C&W’s London group, says: “Next year, despite the troubling economic conditions, we expect things to pick up for landlords, investors and developers.”
The survey also shows that companies will be taking a close look at their real estate strategies in order to use their properties more efficiently. Young expects to see some businesses that are traditionally focused in the West End of London moving to areas such as Clerkenwell, Shoreditch and the South Bank in order to find cheaper space.
Cushman & Wakefield says flexibility and efficiency will be the over-riding priorities for 2012. Only 17% of the respondents to the survey expect to increase floorspace during the next year. Almost three quarters (72%) say they are likely to introduce flexible working practices, in order to use their existing space in a more flexible manner.
“Respondents in our study show a strong commitment to London, but the city cannot afford to rest on its laurels,” he adds. More than three quarters (77%) of those surveyed felt it was important to have a London location, and 52% considered this to be extremely important. But 21% thought London’s position as a global centre was likely to come under threat, and another 24% were undecided about the city’s future significance as a key global centre.
