(Bloomberg) — London firms are ditching their unwanted office space at an even faster rate than in the financial crisis.
More than 1 million square feet (92,900 square meters) 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% in the period, compared with just a 1% increase for the rest of the U.K.
“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 U.K. 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 show. At the same time, U.K. 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.
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Banks including Credit Suisse Group AG, HSBC Holdings Plc and Nomura Holdings Inc. are among those companies currently trying to rent out excess space they no longer need, Bloomberg News reported.
(Updates with London Transport data in 5th paragraph)
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