Occupiers in central London are feeling the squeeze as a lack of grade A office supply is forcing them to make tough decisions.
More than one-third of those questioned (37.5%) said they were braced for an increase in occupational costs as the lack of new supply forced rents up. Another quarter (26.8%) said they were likely to renegotiate existing lease commitments.
And 19.6% said they were considering moving to secondhand, refurbished space, while 12.5% said they were looking at moving to emerging fringe locations.
“What we most want is affordable rents and flexibility in leasing commitment in an uncertain market,” said one respondent.
“Occupiers require maximum flexibility, easy in/out terms or huge incentives,” says another.
When asked what leasing arrangements they would consider, most respondents (39.3%) said they wanted 10-year leases with a 5-year break clause. However, nearly a quarter (23.2%) said they wanted even shorter leases. Also acting as a squeeze to business, 44.6% of those who responded to the survey said they viewed staff remuneration as the key component in retaining staff.
Having good locations near transport nodes was seen by 41.4% as the most important way to keep staff.
However, relatively few (12.5%) said they thought top quality and sustainable office space was a key factor in retaining their workforces.
“Until developers understand and listen to occupiers, lessons will not be learned,” said another respondent to the poll.
damian.wild@estatesgazette.com
