Property developers are not building the kind of office space London needs to work flexibly.
Speaking at the Working Trends 2013 conference, principal of Ramidus Consulting Rob Harris said investors are focusing on large, glossy HQ buildings at the cost of cheaper and simpler options.
“Over a period of time we have lost the ability to deliver a diverse mix of space. We are very adept at delivering 200,000sq ft plus but SMEs and SMOs are largely forgotten in London’s property delivering mechanism.”
Harris said there have been positive developments in terms of shorter lease options that have opened up the property market. However, he cautioned that the number of buildings changing from office use to residential is reducing the supply of smaller, cheaper offices.
“Flexibility will lead to a requirement for much more diverse stock for a more diverse occupier base,” he said. Instead of large HQ buildings, working hubs for multiple small occupiers will be needed.
“It needs to be more diverse, lower specification and flexible.” Flexible businesses set less store by branding and air conditioning, making far fewer demands on building services.
He added that the focus on providing very high specification space does not necessarily fit the needs of the flexible workforce. “We need to provide economic space – much simpler building form and the refurbishment of old stock.” He highlighted the Derwent White Collar Factory development as an example of this.
When it comes to the outer London boroughs, Harris says between 2001 and 2008, 11 boroughs lost office supply and 13 didn’t provide any new stock.
He said overseas investors, who now own more than 50% of the stock in the City, are interested only in a safe haven for their cash, leaving an opportunity for “canny” investors to look at space in a different manner.
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