One in two office occupiers want to relocate in the next three years, Gowling WLG research finds

  • 95% of office occupiers with 1,000+ employees have the flexibility to move premises in the next three years, and almost half (46%) of occupiers surveyed are intending to move when their lease allows.
  • Only 3% of respondents have decided to move to full time remote working.
  • London remains a highly prized location for office occupiers, with more than a third (37%) considering a move to the capital. This is followed by growing appetite for office space in Manchester and Birmingham.
  • The flexibility that serviced offices offer is appealing to more occupiers, with 84% either considering a move or already using this type of accommodation.
  • A third of occupiers will be downsizing office space due to staff working remotely more frequently.

New research from international law firm Gowling WLG has found that the majority of large office occupiers can relocate within the next three years, and with half intending to do so, there is a window of opportunity for investors and landlords to review their portfolios and proactively engage with their tenants.

The research, carried out in collaboration with the British Property Federation, reveals that the offices market is surprisingly mobile, which could lead to mass movement in the months ahead. The majority of office occupiers (89%, rising to 95% for those with 1000+ employees) have indicated that they have flexibility to move due to expiring leases or break clauses within the next 36 months. With such a large proportion of occupiers being able to implement change decisions quite quickly, landlords and investors have an opportunity to review their portfolios and understand what flexible spaces or tenancies they can offer tenants.

Gowling WLG's new report, 'A more flexible future: redefining the role of the office', is based on a survey of 497 senior executives responsible for making property decisions. It sought to find out how occupiers view the new role of the office, following the pandemic, how this will affect the market and what it means for those with office portfolios.

The way offices are viewed and used has changed now that businesses have had time to take stock and think clearly about their office needs since being away from them. The research shows that the drivers for moving offices or upgrading office space are now largely employee focused, with 48% needing a better location to meet staff needs and 38% indicating that the current facilities need to be upgraded to meet those needs.

Certainly the shift to increased remote working cannot be ignored and it remains to be seen how full office spaces will be once the 'work from home' guidance is lifted*. A third of occupiers indicated that they will be downsizing due to staff working remotely more often, and the research findings show that a hybrid model allowing employees to utilise both office and homeworking will be the most popular method of working going forwards.

Commenting on the findings of the report, Dan Gwilliam, Real Estate partner at Gowling WLG, said: "The results of the survey provide a positive outlook for the future of the offices market, but with many occupiers in a position to make changes in the short term, landlords and investors will need to navigate a wider set of considerations and commercial challenges if their portfolios are not to be left behind in the evolution of the office sector".

Location has always been key for office occupiers, with recent market activity suggesting a growing need for offices outside the City. However, this survey shows that London still ranks highest when it comes to choosing a new location for office occupiers; with more than a third indicating that they are considering moving there, the figure rises to 44% for those in the IT & Telecoms industry.

Felicity Lindsay, Real Estate partner at Gowling WLG, added: "There is a misconception that the rising demand for regional office space will mean less demand for space in London. However, the research clearly shows that the City still has a strong pull for businesses, and office owners will need to upgrade existing space to higher specifications and provide flexible models to help meet changing occupier needs."

Just because occupiers can move, doesn't mean that they will if their new needs can be met in the existing space. Ultimately, the need for office space remains, with only 3% of respondents deciding to move to full time remote working and not renew their lease or relocate.

Going forward, landlords and investors should consider the serviced office model as an alternative to the traditional offering. The majority of respondents (84%) viewed serviced offices as a viable option and were either already using this type of accommodation or considering a move to it. Over half (65%) stated that they were considering subletting space that wasn't being utilised, but they will need to get their landlord's consent to those arrangements.

The majority of occupiers surveyed are already focussing on what their long-term office requirements will be, with 99% stating that they are either already adapting their offices or making plans to do so. Having been "out of office" for more than a year, businesses will require more from their office space, with a greater need for enhanced fit-out packages to future proof office space and provide a more comfortable and productive working environment for their employees. Future proofing plans include smart technology to monitor and optimise office usage which was ranked as a top priority (72%) by occupiers, followed by a third citing a greater need for investment into reconfiguration of space.

Ion Fletcher, Director of Policy at the British Property Federation, concluded: "Despite the adoption of increased remote working, it is clear that for most businesses and organisations the office environment, albeit in a more flexible state, is crucial to facilitate new business and employee learning and development.

"But findings also show that office space providers will need to have more nuanced conversations with occupiers about their needs in order to remain competitive and that those conversations could happen sooner than people expect."

Download our report 'A more flexible future: redefining the role of the office' to find out more.

*At the time of publication government guidance to work from home where possible was still in place.


Sujet(s) similaire(s)   Immobilier, Immobilier, Offices

Contacts médias

Sidumisile Lawrence Senior Corporate Communications Executive Birmingham