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Office occupiers' horizons have extended, and they are now looking as far as five years ahead.
So said the latest research from Cushman & Wakefield: "The race for space, pre-letting’s impact on the UK office market."
The report shows that since the global financial crisis of 2009, occupier horizons have gradually lengthened as the supply of new floorspace has fallen.
In the capital this has meant forward-thinking by all occupiers. Over the last 10 years a total of 24.4M SF has been pre-let across Central London, amounting to 267 transactions, and most of this (57%) has been in the City.
However, in the regions the pre-let market has largely been driven by consolidation requirements from the Government following the implementation of the Government Estates Strategy in 2018.
“We are seeing a significant increase in the level of genuine pre-let and pre completion enquiries as companies seek ‘first mover’ advantage on the best space in schemes which are starting on site or complete from the summer of 2019 onwards," Cushman partner Scott Rutherford said. "The M42 has little or no new speculative space coming to the market and this exacerbates this pre-let need.”
When asked about their occupational strategy, occupiers overwhelmingly referenced the term ‘flexibility’ in the context of their selection criteria in terms of lease length, but increasingly in reference to options to either decrease or increase commitment to space in the run-up to practical completion.
“It will not be enough for landlords to deliver greater volumes of space; their strategies will need to evolve to the ever-changing needs of the occupier. Flexibility, in every sense of the word, is central to the success of future office schemes offering pre-lettings, alongside the provision of amenities and services which mean employees have the best possible working environment,” Cushman & Wakefield UK Head of Offices Patrick Scanlon said.
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