Unused office space after coronavirus could cost London-based businesses almost £13 billion
Unused office space after coronavirus could cost London-based businesses almost £13 billion according to a new report by Space Three Two.
According to a survey of London office workers, employees want to spend an average of 2.7 days back in the office once all Covid-19 restrictions have been lifted, on the basis they had the resources to work from home comfortably (e.g. the right equipment, home office set-up etc).
1 in 10 workers (11%) said didn’t want to go back to the office at all.
The total London commercial rental market according to Costar is worth an approximate £17.9 billion. Prior to coronavirus, office workers spent an average of 4.2 days a week in the office.
If this drops to an average of 2.7 days after coronavirus, the utilisation rate per office (e.g. the percentage of time that desks in any given office is in use), would drop from 44% pre-Covid to 28% post-Covid.
Insights from the report show London offices are only using desks 28% of the time, equating to a 72% rate of wastage. As a result, unused desks could cost businesses £12.84 billion in total. This means 72% of all office rent paid by businesses in London would be spent on empty desks.
Furthermore, analysing office rental data from commercial real estate information company, Costar, along with pre-Covid-19 utilisation rates provided by The British Council for Offices, shows that a combination of factors could be about to lead to a seismic shift in the way that the commercial property sector functions.
The study suggests that London businesses are currently carrying unnecessary, unsustainable costs which look to have the potential to devastate the profitability of thousands of businesses across the capital.
It is this combined financial and logistical challenge that has led to the emergence of this brand-new category of office timeshare.
Office timeshare is where two businesses share a single office on different days of the working week. Businesses are able to specify days where they have exclusive use of the space with their timeshare partner, with both parties benefitting from the reduced cost of office rental fees.
Jon Dweck, founder of Space Three Two, comments: “London businesses will be spending a combined £12bn on office space that they do not need once Covid-19 restrictions are lifted”, says Jon Dweck, founder of Space Three Two.
“Desk utilisation was already a major issue pre-Covid, with more than 50% of all desks empty at any given moment. Post-Covid, due to changing working practices and reduced workforces, we can expect 7/10 of all office desks to be empty at any given time.
“This is the tip of the iceberg. These figures paint a damning picture for London-based firms but we expect to see similar trends across the UK. The pandemic has caused a long-lasting seismic shift in people’s working habits.
“People want to spend less time commuting and more time at home, but unused office space is an expensive challenge for businesses. Office timeshare, or the ability to share office space with another firm of a similar size, is the future of workplaces.”