Office space has re-emerged as the most sought-after commercial property asset in England as the return to the physical workplace gathers pace according to latest research by BPS London.
Analysis of investor demand across the commercial property market shows that offices now attract the highest level of interest nationally, with 30.5% of available office opportunities already sold subject to contract or under offer.
Retail assets follow closely at 30.2%, while industrial and warehouse opportunities account for 27.5%. Leisure and hospitality continue to lag behind, with just 16.1% attracting investor interest.
The resurgence in office demand is being driven by a broad shift back to workplace-based working. BPS London’s study combines investor data with an assessment of commercial rental supply and a survey of London office workers, pointing to renewed confidence in offices as a core part of business operations.
OFFICE BOOM
Regional data shows particularly strong appetite outside the capital. The West Midlands leads the way, with 39.0% of office opportunities already attracting investor interest, followed by the South East at 36.6% and the East of England at 33.1%.
The figures suggest that, across much of the country, investors are increasingly backing offices as businesses bring staff back on site.
London, however, remains an exception. In the capital, just 21.6% of office opportunities have attracted investor interest, placing offices behind industrial, leisure and retail assets. BPS London says this reflects an oversupply of space rather than a lack of occupier demand.
Offices account for 71.0% of all available commercial rental stock in London, compared with 15.3% for industrial and warehouse space, highlighting the scale of competition among office landlords.
RETURN TO WORK
At the same time, worker behaviour suggests a decisive shift back to offices. The survey found that 54% of London office workers are now expected to attend the office full-time, with a further 36% predominantly office-based.
Just 7% operate an evenly split hybrid model, while only 3% work mostly remotely.
The research also points to changing expectations. Workers now place greater value on technology and meeting facilities, alongside improved communal areas, air quality and overall design, underlining the pressure on landlords to upgrade older stock.
RENEWED DEMAND
Mahir Vachani, director at BPS London Developments, says: “The pandemic had a profound impact on the commercial office sector, as working from home became the default for many businesses almost overnight.
“However, what we’ve seen over the last year in particular is a decisive move back towards office-based working, with the vast majority of employees now either fully or predominantly based in the workplace.
“That renewed occupier demand is clearly feeding through into investor appetite for office space across much of the country.”
“Expectations are higher than ever.”
But he adds: “London, however, remains something of an outlier, largely due to the sheer volume of office space currently available to rent, much of which no longer aligns with how businesses and employees want to work today.
“As people return to the office, expectations are higher than ever, not just in terms of professional functionality, but also wellbeing, design, technology and overall experience.
“While large volumes of office space were repurposed or left behind in the wake of the pandemic, relatively little has been done to comprehensively revitalise the remaining stock.”
