Empty office space could cost London companies £13 billion
Unused office space is expected to cost London companies £12.84 billion ($17 billion) following the coronavirus pandemic in the capital.
According to a new report from Space Three Two, over 70% of all office rents paid by companies in London are spent on empty desks.
The coronavirus pandemic has brought about drastic changes in the workplace as employees have had to adapt and work from home due to government guidelines and lockdowns.
The survey of London office workers shows that employees want to spend an average of 2.7 days back in the office once all COVID-19 restrictions are lifted – provided they have the right work equipment and a comfortable home office setup.
At the same time, one in ten employees (11%) said they did not want to return to the office at all.
Before the pandemic, office workers spent an average of 4.2 days per week in the office.
The occupancy rate per office – the percentage of time desks in a given office are in use – would fall from 44% before the pandemic to 28% after the pandemic.
In London offices, desks are occupied only 28 percent of the time, representing a wastage rate of 72 percent, the report found.
READ MORE: Property prices in London expected to fall over the next three months
The research suggests that, faced with increasing pressure from the coronavirus crisis, companies are releasing excess inventory into the sublease market to protect themselves from looming office space liabilities.
As a result, the availability of office sublets in London has risen to a 15-year high
Jon Dweck, founder of Space Three Two, said: “Desk utilisation was a major issue even before Covid, with more than 50% of all desks empty at any given time. 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 just the tip of the iceberg. These figures paint a devastating picture for London-based companies, but we expect similar trends across the UK. The pandemic has led to a long-lasting, radical change in people’s working habits.
“People want to spend less time commuting and more time at home, but unused office space is a costly challenge for companies. Office timesharing, or the ability to share office space with another similarly sized company, is the future of workplaces.”
The entire commercial rental market in London is worth around £17.9 billion, according to Costar data.
Many companies have begun rethinking their work options since the coronavirus crisis forced nationwide and local lockdowns and the government urged its workers to avoid commuting whenever possible.
In October, accounting firm Deloitte announced it would close four UK offices and offer home-working contracts to the 500 employees at its offices in Gatwick, Southampton, Liverpool and Nottingham.
Lloyds Banking Group (LLOY.L) also asked most of its 65,000 employees currently working from home due to COVID-19 to continue doing so until at least spring 2021.
Other major companies considering switching to home offices or downsizing include BP (BP), which reported in late August that the oil giant would sell its headquarters.
Watch: Why job losses have risen despite the economy reopening
