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Office space demand rises as more workers return to physical workplaces, data finds

BPS London said the high supply of office space shows the market is still adjusting after the pandemic. 

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Office space is now the most sought-after commercial property asset in England, as more people return to physical workplaces, research by BPS London found. 

At a national level, 30.5% of office opportunities were already sold subject to contract or under offer, compared to 30.2% for retail and 27.5% for industrial and warehouse space. 

Leisure and hospitality assets had the lowest interest, with 16.1% attracting investors.

Investor demand for offices was strongest in the West Midlands, where 39% of office opportunities found buyers, followed by the South East at 36.6% and the East of England at 33.1%. 

In the capital, 21.6% of office opportunities attracted investors, behind industrial, leisure and retail. 

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BPS London said this was due to oversupply rather than a fall in sector performance.

Analysis showed that offices made up 71% of all available commercial rental stock in London, compared to 15.3% for industrial and warehouse space, the next highest category. 

A survey of London office workers found that 54% were expected to attend the office full-time, and 36% were mainly office-based with some remote working. 

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Only 7% said they worked under a hybrid arrangement, and just 3% were mostly remote.

Workers now put higher value on better technology, improved meeting facilities, communal and breakout areas, air quality, on-site amenities, more space, lower desk density and better design.

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BPS London said the high supply of office space shows the market is still adjusting after the pandemic. 

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Mahir Vachani, director at BPS London Developments, said: “The pandemic had a profound impact on the commercial office sector, as working from home became the default for many businesses almost overnight. 

“However, what we’ve seen over the last year in particular is a decisive move back towards office-based working, with the vast majority of employees now either fully or predominantly based in the workplace.

“That renewed occupier demand is clearly feeding through into investor appetite for office space across much of the country.”

Vachani added: “London, however, remains something of an outlier, largely due to the sheer volume of office space currently available to rent, much of which no longer aligns with how businesses and employees want to work today.

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“As people return to the office, expectations are higher than ever, not just in terms of professional functionality, but also wellbeing, design, technology and overall experience. 

“While large volumes of office space were repurposed or left behind in the wake of the pandemic, relatively little has been done to comprehensively revitalise the remaining stock.”

He said: “At BPS London, our focus is firmly on raising the bar by investing in high-quality, future-proofed office environments that reflect modern working practices. 

“As the market continues to rebalance, we believe that best-in-class office space will be increasingly sought after by both occupiers and investors alike.”

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