Demand for office space in London is crashing and analysts believe the situation is set to get worse.
Goldman Sachs says deals in the sector are down 40 per cent compared with pre-pandemic levels and with new offices being built the situation is set to deteriorate.
It comes amid a growing shift towards hybrid working following the pandemic.
Deal activity in the sector has slumped near global financial crisis-era lows, while a spike in the supply of new offices will weigh on rental prices, Goldman Sachs analyst Jonathan Kownator said.
“We are increasingly cautious on the outlook for London office capital values,” he said.
“Sentiment towards owning office assets remains low.”
The property sector has suffered this year as interest rates have surged, while commercial and office real estate firms have also been grappling with the shift towards hybrid working models since the pandemic.
A looming wall of bond maturities is also a big issue with real estate companies set to face refinancing large debt loads at much higher rates, Mr Kownator said.
British Land Co, whose City of London tenants include UBS Group AG and TP ICAP Group Plc, last month marked down the value of its portfolio by 12 per cent.
The landlord was also demoted from the blue chip FTSE 100 index in May after its shares fell 35 per cent in a year.
A survey from real estate agents Knight Frank showed that half of large multinational companies plan to reduce office space as they adjust to hybrid working patterns, although the cuts are likely to be modest as few plan to go fully remote.
Knight Frank said 50 per cent of employers with more than 50,000 staff intended to reduce office space by 10 per cent to 20 per cent in the next three years as they reassess their needs.
“For most occupiers an office-centric approach in a more flexible environment will require a fundamental reworking of the workplace,” Knight Frank executive Tim Armstrong said.
Commercial property construction has held up better than residential construction in Britain in recent years, but both sectors are now being challenged by higher interest rates.
Antony Antoniou, CEO of real estate firm Robert Irving Burns, said he saw a risk of recession as businesses focused on managing debt rather than investing for growth.
Property development and investment firms British Land and Land Securities last month flagged headwinds from interest rate rises as well as uncertainty from the change in working patterns.
Data from real estate adviser Cushman & Wakefield said office tenants signed nearly 600 new leases over 465 square metres last year but the premises were smaller than before the pandemic.
ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
More coverage from the Future Forum
The specs
Engine: 2.0-litre four-cylinder turbo
Power: 268hp at 5,600rpm
Torque: 380Nm at 4,800rpm
Transmission: CVT auto
Fuel consumption: 9.5L/100km
On sale: now
Price: from Dh195,000
UAE currency: the story behind the money in your pockets
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
More from Neighbourhood Watch:
The rules of the road keeping cyclists safe
Cyclists must wear a helmet, arm and knee pads
Have a white front-light and a back red-light on their bike
They must place a number plate with reflective light to the back of the bike to alert road-users
Avoid carrying weights that could cause the bike to lose balance
They must cycle on designated lanes and areas and ride safe on pavements to avoid bumping into pedestrians
Company profile
Date started: 2015
Founder: John Tsioris and Ioanna Angelidaki
Based: Dubai
Sector: Online grocery delivery
Staff: 200
Funding: Undisclosed, but investors include the Jabbar Internet Group and Venture Friends
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Global state-owned investor ranking by size
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United States
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China
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UAE
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Japan
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Norway
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Canada
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Singapore
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Australia
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Saudi Arabia
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South Korea
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The%20specs
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Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
The specs: 2018 Nissan Patrol Nismo
Price: base / as tested: Dh382,000
Engine: 5.6-litre V8
Gearbox: Seven-speed automatic
Power: 428hp @ 5,800rpm
Torque: 560Nm @ 3,600rpm
Fuel economy, combined: 12.7L / 100km
The specs
Engine: 4.0-litre flat-six
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
10 tips for entry-level job seekers
- Have an up-to-date, professional LinkedIn profile. If you don’t have a LinkedIn account, set one up today. Avoid poor-quality profile pictures with distracting backgrounds. Include a professional summary and begin to grow your network.
- Keep track of the job trends in your sector through the news. Apply for job alerts at your dream organisations and the types of jobs you want – LinkedIn uses AI to share similar relevant jobs based on your selections.
- Double check that you’ve highlighted relevant skills on your resume and LinkedIn profile.
- For most entry-level jobs, your resume will first be filtered by an applicant tracking system for keywords. Look closely at the description of the job you are applying for and mirror the language as much as possible (while being honest and accurate about your skills and experience).
- Keep your CV professional and in a simple format – make sure you tailor your cover letter and application to the company and role.
- Go online and look for details on job specifications for your target position. Make a list of skills required and set yourself some learning goals to tick off all the necessary skills one by one.
- Don’t be afraid to reach outside your immediate friends and family to other acquaintances and let them know you are looking for new opportunities.
- Make sure you’ve set your LinkedIn profile to signal that you are “open to opportunities”. Also be sure to use LinkedIn to search for people who are still actively hiring by searching for those that have the headline “I’m hiring” or “We’re hiring” in their profile.
- Prepare for online interviews using mock interview tools. Even before landing interviews, it can be useful to start practising.
- Be professional and patient. Always be professional with whoever you are interacting with throughout your search process, this will be remembered. You need to be patient, dedicated and not give up on your search. Candidates need to make sure they are following up appropriately for roles they have applied.
Arda Atalay, head of Mena private sector at LinkedIn Talent Solutions, Rudy Bier, managing partner of Kinetic Business Solutions and Ben Kinerman Daltrey, co-founder of KinFitz
Sweet%20Tooth
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THE BIO
Favourite car: Koenigsegg Agera RS or Renault Trezor concept car.
Favourite book: I Am Pilgrim by Terry Hayes or Red Notice by Bill Browder.
Biggest inspiration: My husband Nik. He really got me through a lot with his positivity.
Favourite holiday destination: Being at home in Australia, as I travel all over the world for work. It’s great to just hang out with my husband and family.
The biog
Hobbies: Writing and running
Favourite sport: beach volleyball
Favourite holiday destinations: Turkey and Puerto Rico
THE%20FLASH
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The biog
Favourite film: Motorcycle Dairies, Monsieur Hulot’s Holiday, Kagemusha
Favourite book: One Hundred Years of Solitude
Holiday destination: Sri Lanka
First car: VW Golf
Proudest achievement: Building Robotics Labs at Khalifa University and King’s College London, Daughters
Driverless cars or drones: Driverless Cars
