London firms are dumping office space as workers stay home

London

LONDON firms are ditching their unwanted office space at an even faster rate than in the financial crisis. More than one million square feet has become available for sublet since June, the equivalent of two Gherkin skyscrapers, according to research by real-estate data company CoStar Group Inc.

Businesses are offering up the excess space as the pandemic keeps large swathes of employees working from home.

The trend is so far only limited to London: the city's second-hand space surged by 21 per cent in the period, compared with just a 1 per cent increase for the rest of the United Kingdom.

"The success of home working, coupled with ongoing concerns around public transport and coronavirus infections, has led many firms to reconsider their office space needs," Mark Stansfield, head of UK analytics at CoStar, wrote in a note to clients. "Some of this impact is now being seen in the data."

While Londoners are steadily increasing their use of public transport after schools reopened, the number of subway commuters is still just a third of last year's number, data compiled by transit manager Transport for London shows.

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At the same time, UK coronavirus cases have been on the rise again. Second-hand office space poses a threat to developers of new buildings, offering tenants seeking to move a cheaper alternative. While newly developed space that has yet to be leased in London remains relatively scarce, overall vacancy rates are increasing due to the buildings being offered up by companies that no longer need them.

Banks including Credit Suisse Group, HSBC Holdings and Nomura Holdings are among those companies currently trying to rent out excess space they no longer need. BLOOMBERG