The future of London office space is hanging in the balance. In 2014 and 2015, many large-scale projects began construction, and they are due to be completed soon. The Scalpel, the “Can of Ham”, and 22 Bishopsgate are all due to open in the next year or so, with much of their space being designated for commercial and business use.
But since the Brexit referendum, many companies that would have likely been housed in these new buildings are talking of moving to Frankfurt, Dublin, and other cities that will remain in the EU. These moves will not only leave London’s brand new office blocks with fewer companies to fill them, but they could also empty out the office buildings that are currently occupied.
It’s not just Brexit that’s emptying out the capital’s desks; changes in the insurance sector have led many businesses to consolidate their workforces into smaller teams, and mergers and acquisitions have moved many companies under the same roof. All of these things are leading to empty buildings, and creating less need for the large projects that are due to be completed soon.
Spectators like the Architects’ Journal are cheerily optimistic about the imminent increase in London office space, but others are concerned. The Financial Times said there are “shades of 2008” in the current situation, implying a looming crisis. In that year, multiple projects started in the recent economic ‘boom’ era were finished just as a financial crash began.
At this time, the FT says, the empty office space was bought up by investors from “cash-rich Qatar”, or those backed by HBOS, which would soon collapse. The paper draws parallels between these last-minute investments, and the current wave of investment offers from wealthy Chinese individuals and organisations. Lee Kum Kee, the Hong Kong oyster sauce giant, is said to be interested in buying London’s Gherkin building. And China’s CC Land recently bought 50% of the Cheesegrater for £1.15bn in what some have called “trophy hunting” rather than investing, for the poor likelihood of ROI this deal has.
Rather than leave the empty offices to be bought up by Chinese investors and remain empty, there is a way to save London’s office space and boost the economy in one go. It’s an approach that relies on SMBs.
How could small and medium businesses save London office space?
Bigger businesses may be consolidating their workforces and moving out of the country, but the UK’s SMBs are here to stay. Unfortunately, office space in London is so expensive that the large corporations are the only companies that can afford it.
Serviced offices give smaller companies the chance to work in prime locations at a fraction of the cost. Rather than the long-term leases usually required for London office space, serviced offices offer flexible contracts, allowing smaller businesses to come and go as they please.
Because of the sky-high prices of conventional offices in the city, the serviced office sector is growing and thriving. Serviced office providers like i2 Office have seen small businesses take increased interest in London locations, such as their Victoria office space, particularly in recent years.
If many of these newly-opening and newly-abandoned office buildings were ran as serviced offices, smaller businesses and startups would be able to work from prime locations in London for much less. This would help boost the UK’s local economy, and give many entrepreneurs the chance to compete with the biggest businesses on a level field, or at least on their own turf.
The government could help with this plan, either by making the huge investment of buying office space to rent out, or by subsidising serviced office providers who take these buildings on and rent out offices to small and medium-sized businesses. With a plan like this in place, we will never have to worry about London becoming a city of empty office blocks again.
