Agents ‘struggling’ to get tenants for older offices
Nearly two-thirds (62%) of the UK’s commercial landlords are struggling to attract tenants to traditional offices as working patterns changed during the pandemic, according to new research.
The survey among 204 UK commercial landlords, all of whom own one or more office buildings in the UK, found a similar proportion (64%) reported a “notable shift” in tenants’ demands, including terms and use of space.
As a result, seven in ten (71%) office landlords plan to increase their flexible workspace offering in the coming five years.
The research by flexible workspace provider infinitSpace found that UK commercial landlords currently dedicate an average of 33% of their office portfolio to some form of flexible or co-working spaces. By 2026, this is forecast to rise by a third to 44%.
Since the start of 2020, 59% of office landlords have begun offering shorter and more flexible leases. Over half (52%) added new facilities to allow tenants to collaborate when inside the building, such as meeting rooms or breakout areas, while 63% have added facilities to improve the wellbeing of tenants, such as a gym or relaxation space.
Wybo Wijnbergen, CEO of infinitSpace, said: “What businesses want and need from their office has been steadily evolving over the past decade, but the pandemic has kicked the pace of change into overdrive.
“Our research shows that, as hybrid working becomes commonplace and businesses look for more collaborative and engaging workspaces, many landlords are struggling to attract tenants if they don’t have flexible offerings.
“Encouragingly, most office landlords are responding to this challenge. From the terms of the leases and the facilities on offer, to the ways their workspaces foster innovation and offer a great tenant experience – commercial landlords are evidently looking to transform their buildings to fit the ‘new normal’.
“Our data shows that many traditional offices will be converted into flexible workspaces in the coming years. In many instances, this will involve the landlord themselves entering into a long-term, inflexible lease with an operator, which then runs the flexible workspace in their building.
“But instead, office landlords should feel empowered to manage their own brands. This will lead to a more diverse and dynamic commercial real estate market.”
New office for Eaton
Eaton Corporation, a power management solutions company, has relocated from Tay House in Bath Street, Glasgow to 1,720 sq ft, at the newly-refurbished Onyx on Bothwell Street.
CBRE represented Eaton in the transaction whilst Ryden acted on behalf of the landlord, CEG.