"The latest leading data from both Rightmove and EG highlights that businesses clearly still see value in retaining a physical presence for employees, even if they now gather there more infrequently"
The office sector has undergone significant change since the pandemic, with more people able to work from home or flexibly, plus the upcoming changes to EPC legislation, which states all commercial properties will need a minimum of an EPC rating of C by 2027, and B by 2030.
New research from Rightmove and commercial property intelligence provider EG found demand to lease office space, the largest commercial property sector, is still 9% higher than in 2019.
However, it is 8% down on last year’s levels driven by the impact of rising inflation and interest rates on corporate spending.
The combined Rightmove and EG dataset measures the number of enquiries that are being sent to commercial agents, with the demand data from both property websites indicating the same trends. The data compares January to April 2023 with the same four-month period last year and in pre-pandemic 2019.
Enquiries to lease retail spaces are also up compared to 2019, by 11%, and are marginally below 2022’s levels (-3%) indicating a desire from retailers to retain a physical presence on high streets.
Demand to lease office space is holding up most strongly in Scotland, now 11% higher than in 2019 and the only region to improve on last year at +7%. This contrasts with London where demand to lease office space is down 1% on 2019 and 11% behind last year’s levels.
Looking more locally at cities, Leeds (+46%), Glasgow (+26%) and Liverpool (+17%) have seen the biggest increase in demand for office space to lease compared with 2019, more so than traditional hotspots like Manchester (+13%) and Birmingham (-3%).
Andy Miles, Commercial Expert at Rightmove said: “The way we work has been one of the biggest changes to come out of the pandemic, with flexible, hybrid or even completely remote working becoming the norm for many businesses now.
"The latest leading data from both Rightmove and EG highlights that businesses clearly still see value in retaining a physical presence for employees, even if they now gather there more infrequently. It's likely that companies are increasingly assessing the size of location they need, and the flexibility of their arrangements in order to best fit the needs of the modern workforce.
“With the upcoming changes to minimum EPC requirements, we anticipate that there may be additional demand for office space that already meets these standards and does not require further work by the landlord.”
Anna Reed, Data Director at EG added: “Enquiries for office space to lease has stayed surprisingly strong considering the transformation experienced in working models since mid-2020. Whilst London enquiries are down it really is only by a small amount considering the change in office occupancy levels. What has changed however is the type of space occupiers want; high spec, sustainable with flexible terms and shorter leases, as well as shifting to smaller floor plates.”
