BOE's Ramsden sees some commercial real estate being scrapped

[LONDON] Some commercial real estate in the UK could end up being scrapped as companies decide they no longer need so much office space in the wake of the coronavirus pandemic, according to Bank of England deputy governor Dave Ramsden.

Referring to new office blocks in London's financial centre, Mr Ramsden said not all will go back to their old usage now that firms and employees have become used to working from home. The extent of the change could be reduced if an effective Covid vaccine is found soon.

"I have no doubt that over time uses will be found for that space," he said. "But I do think there'll be a reasonable degree of scrapping as well, because I don't think we're going back to the old normal."

Mr Ramsden cited commercial real estate as an example of ways the coronavirus pandemic will have a lasting effect on the economy. Some big technology companies such as Facebook, Microsoft and Dropbox say they'll make working from home a more permanent option for some employees.

The UK central bank is watching the market closely due to its extensive use as collateral, which could expose the banking sector to any collapse in values, he said.

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