Why Is London Still Building So Many Offices?

Harry Rosehill
By Harry Rosehill Last edited 19 months ago
Why Is London Still Building So Many Offices?
office windows lit at night - no one is at their desk
Weekly London office occupancy in the month of March 2022 was 31% compared to 63% before the pandemic. Image: Londonist

Walking around the City of London one weekday afternoon recently, I couldn't help but peer into various office buildings. Behind the glass I saw everything you expect to see in an office. Desks, tick. Computers, tick. Workers…

While the offices weren't empty, they were rarely more than half full. This isn't too much of a surprise post-pandemic; there's been a huge modal shift towards working from home — in part thanks to the incontrovertible truth that many jobs people had been travelling for could be done from anywhere.

Recent figures suggest that weekly London office occupancy in the month of March 2022 was 31% compared to 63% before the pandemic.

So if fewer people are going into offices, why are so many still being built?

Of course, some will be from projects that began pre-pandemic. But even ignoring my anecdotal afternoon stroll (and the fact cranes still blot out much of the City's skyline), investment in new London offices returned to pre-pandemic levels at the start of 2022, while new developments create a steady trickle of headlines when they gain planning approval, like this major one on the South Bank.

Reimagining "workplaces"

Canary Wharf is set to receive a lush eco-revamp in a partnership with The Eden Project. Image: Canary Wharf Group

Lendlease is a major real estate group that is outwardly optimistic about offices in London. In December 2021, the company announced a new joint venture partnership with CPP Investments for an office development project at International Quarter London in Stratford. The first step of that partnership is The Turing Building, a 350,000 sq ft "workplace" — a noteworthy and intentional term, compared to "offices", which features only once in a data notice on the promotional website.

Kristy Lansdown is a project director at Lendlease, working on the project. She makes clear that what businesses want from an office has changed post-pandemic. "We hear a lot from organisations talking about how their employees want more than just the workplace," says Lansdown. These employees, she explains, want to be part of a "24/7 neighbourhood, it has to be an active space, there has to be a reason for people to leave their homes post pandemic."

A building like the Turing Project will have the Olympic Park on its doorstep, offering a smorgasbord of food and drink options, verdant surroundings, world-class sporting venues, and cultural institutions like the V&A and Sadler's Wells, which are establishing east London outposts.

The Turing Building purports to be more 'neighbourhood' than offices. Image: Lendlease

This holistic approach to an office district can also be seen at Canary Wharf, which is set to receive a lush eco-revamp in a partnership with The Eden Project. It's a logical next step for the Isle of Dogs district, which has been trying to prove to Londoners over the past few years that there's more to the area than office cubicles and a DLR stop — by way of things like its winter lights shows, and the roof garden at Crossrail Place.

What businesses want inside an office has changed too. Rachel Edwards, who is on Lendleases's Future Workplaces team, talks about how one of their tenants started 'retrofitting more collaborative space' into their office midway through 2021, to adapt to hybrid working. The tenant ultimately decided it needed 20%-30% more space than it had pre-pandemic, despite workers being in the office less.

It's a view reinforced by Mark Kowal, Senior Vice President of the British Council for Offices and Partner at Sheppard Robson: "It is myth that more flexible or hybrid working heralds a decline in the desire for office space," says Kowal, "Over the past five years, the adoption of activity-based working and desk sharing reduced the number of traditional desks in favour of a variety of workspace settings to suit a technologically-enabled workforce.

"Covid-19 accelerated this trend, but in doing so has opened up opportunities for increased collaboration and social areas within the office, creating a dynamic shift in the space budget and bringing a focus to design features that are attractive to employees."

Can old office space become new residential space?

The City of London from above
The City of London is reluctant to move away from offices. Image: Jason Hawkes

According to research from commercial real estate group CBRE there's currently 25.6m sq ft of available office space in central London. In the three years prior to the pandemic, that number never went higher than 15m sq ft. Uptake is back on the rise, but so is office building — another 5.1m sq ft is expected to be completed between April 2022 and the end of the year.

Which begs the question: what happens to all the excess space?

A paper for the think tank Centre for London posits that less desirable offices in the central activities zone or CAZ (the City, West End and Canary Wharf), alongside unoccupied shops and old car parks, should be converted for residential use. Not only would this help tackle London's housing crisis — which, shock horror, hasn't gone away — it would also help boost the CAZ's local economy, as these new residents would spend money here.

Converting redundant office space into housing is an intriguing prospect, but it has to be done carefully. The government has created a straightforward pathway, using its permitted development scheme. However, the City of London, is reluctant to move away from offices — it issued an Article 4 Direction, removing permitted development rights for buildings in the City and meaning that converting property for residential use will need to go through the planning process.

A City of London Corporation spokesperson said: "The success of the Square Mile has been built on the benefits of agglomeration and offices remain at the core of our recovery plan."

Where does the environment fit in?

Buildings like Bastion House are being demolished, rather than repurposed. Image: Londonist

Attached to every press release about a new development is a section dedicated to a building's environmental credentials. Terms like 'carbon neutral' and 'all-electric' are this season's must-have item. This is clearly a major concern for both landlords and tenants. It's highlighted in quotes from Chris Davies, the Chief Executive of shared workspace company Uncommon: "Grade A properties will become more and more prized but below that level they will not be ready for the carbon neutral environment and they will become unlettable [by 2030]."

At this point you might be scratching your heads asking the obvious question: wouldn't the most environmentally friendly thing be to refurbish old buildings, instead of building new ones from scratch? Well, that might be the case, but it's rarely happening. Take Bastion House in the City. Or the case of the flagship M&S store on Oxford Street; the nearly 100-year-old art deco store is set to be demolished and turned into a gym, shops and you guessed it… offices. The outcry has been loud, with experts warning about the carbon footprint of bulldozing such a building, and instead encouraging retrofitting. However, Mayor Sadiq Khan declined to intervene, stating that the carbon footprint had been considered from early in the process.

No matter the problems with current offices, the industry's go-to solution is always to build new ones. Whether they're needed or not.

Last Updated 24 August 2022