London, 31st July 2023
New data from the UK’s biggest property website Rightmove and commercial property intelligence provider EG reveals that demand to lease office space is still higher than pre-pandemic 2019 despite the rise of home and hybrid working.
The office sector has undergone significant change since the pandemic, with more people able to work from home or flexibly and upcoming changes to EPC legislation, which states all commercial properties will need a minimum of an EPC rating of C by 2027, and B by 2030.
Demand to lease office space, the largest commercial property sector, is still 9% higher than in 2019, though it is 8% down on last year’s levels driven by the impact of rising inflation and interest rates on corporate spending.
The combined Rightmove and EG data measures the number of enquiries that are being sent to commercial agents, with the demand data from both property websites indicating the same trends. The data compares January to April 2023 with the same four month period last year and in pre-pandemic 2019.
Enquiries to lease retail spaces are also up compared to 2019, by 11%, and are marginally below 2022’s levels (-3%) indicating a desire from retailers to retain a physical presence on high streets.
Demand to lease office space is holding up most strongly in Scotland, now being 11% higher than 2019 and the only region to improve on last year at +7%. This contrasts to London where demand to lease office space is down 1% on 2019 and 11% behind last year’s levels.
Looking more locally at cities, Leeds (+46%), Glasgow (+26%) and Liverpool (+17%) have seen the biggest increase in demand for office space to lease compared with 2019, more so than traditional hotspots like Manchester (+13%) and Birmingham (-3%).
Lease enquiries by commercial sector
|Commercial Sector||Change in enquiries to lease space compared to 2019||Change in enquiries lease space compared to 2022|
|Leisure & Hospitality||-8%||+3%|
|Industrial & Warehouses||+7%||-11%|
Office enquiries by Region
|Region||Change in enquiries to lease office space compared to 2019||Change in enquiries to lease office space compared to 2022|
|Yorkshire & The Humber||24%||-8%|
Andy Miles, Commercial Expert at Rightmove said: “The way we work has been one of the biggest changes to come out of the pandemic, with flexible, hybrid or even completely remote working becoming the norm for many businesses now. The latest leading data from both Rightmove and EG highlights that businesses clearly still see value in retaining a physical presence for employees, even if they now gather there more infrequently. It’s likely that companies are increasingly assessing the size of location they need, and the flexibility of their arrangements in order to best fit the needs of the modern workforce. With the upcoming changes to minimum EPC requirements, we anticipate that there may be additional demand for office space that already meets these standards and does not require further work by the landlord.”
Anna Reed, Data Director at EG added: “Enquiries for office space to lease has stayed surprisingly strong considering the transformation experienced in working models since 2020. Whilst London enquiries are down it really is only by a small amount considering the change in office occupancy levels. What has changed however is the type of space occupiers want; high spec, sustainable with flexible terms and shorter leases, as well as shifting to smaller floor plates.”
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