Nearly half of office owners struggle with soaring costs

Nearly half of office landlords are struggling with operational costs caused by high inflation, according to a survey delving into the financial woes weighing on their minds. A survey commissioned by workspace provider infinitSpace has found 48% of office owners are finding operational costs at their properties difficult to manage, caused by the inflationary environment. More than one in seven (14%) office landlords feared their buildings were at risk of closing in the next five years, owing to affordability concerns. A quarter said their office buildings do not generate a profit, while nearly a third (31%) reported struggling with rising debt repayments. A fifth said they were unsure if they will be able to afford to pay off the debt secured on their properties. Some landlords have taken action to mitigate the damage caused by the challenging economic climate. The survey, which polled 250 landlords in the UK, noted that 17% had already sold or were planning to sell office buildings to remain buoyant, while a fifth had been forced to make redundancies in the past two years. Despite the challenges, many landlords expressed optimism for the future of the market, with half of respondents expressing confidence in the financial performance of their office building portfolios over the next five years. Meanwhile, 61% believed occupancy rates will increase over the same period. Wybo Wijnbergen, chief executive of infinitSpace, said: “Office landlords are facing a worrying array of financial challenges. The high cost of borrowing has put immense pressure on the industry, only compounded by high inflation, which has made operational costs difficult to manage. So it’s no surprise that many feel uncertainty about the current state of affairs for their portfolios. “The intent of sharing this research is not to fearmonger, but to raise awareness and highlight that, despite these challenges, hope is not lost. In fact, as many respondents seem to recognise, the office market has a bright future ahead. “We must remember that redundancies and closures may protect a portfolio in the short term, but they won’t address the root cause – landlords have plenty of other tools in their kit to futureproof their assets. “A strategic, future-focused approach that taps into market demand is key. Looking into converting underutilised properties into other real estate types with the help of third-party providers can equip landlords to thrive in the rapidly evolving workspace landscape, helping them secure a more stable financial future.” Image © Razlan Hanafiah/Unsplash