Unused office space after coronavirus could cost businesses billions
Unused office space after coronavirus could cost London-based businesses almost £13bn, according to a new report by SpaceThreeTwo, a new office timeshare marketplace born out of lockdown.
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, assuming they have the resources to work from home comfortably (e.g. the right equipment, home office set-up, etc).
One in ten workers (11%) said they don’t want to go back to the office at all.
According to commercial property professionals CoStar, the total London commercial rental market is worth an approximate £17.9bn. 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 £12.84bn in total, meaning 72% of all office rent paid by businesses in London would be spent on empty desks.
Analysis of office rental data from 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.
Says the British Council for Offices in its report, ‘Office Occupancy: Density and Utilisation’:
“The changing nature of the workplace has been evident for a number of years; exacerbated now due to COVID. Most notably, we have seen the spread of ‘agile working’: technology-enabled workstyles, typified by a high degree of choice and mobility; using a variety of work settings and workplaces, depending on tasks and preferences.”
Says Jon Dweck, founder of SpaceThreeTwo:
“London businesses will be spending a combined £12bn on office space that they do not need once COVID-19 restrictions are lifted. 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 seven in ten 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.”