One of the country’s biggest commercial landlords has hailed a bounce back in demand for offices as workers return to their desks.
British Land said it has been boosted by the return-to-work mandates imposed by some of the UK’s largest employers.
Rents have been driven up by a lack of supply after office investment dwindled during the pandemic, the London-listed developer said.
Firms are scaling back how much home-working they allow. It comes amid fears the shift has stifled productivity and career progression.
HSBC this week warned staff that bonuses will be cut if they fail to come to the office. City auditor PwC has threatened to sack those who stay home too often.
Corporate giants Amazon, BT and Asda have also ordered staff to spend more time at their desks.
Back to the office: Employers are dramatically scaling back the amount of homeworking they allow amid fears that the shift has stifled productivity and career progression
British Land chief executive Simon Carter said: ‘Return to the office is in full swing with mid-week occupancy back to pre-pandemic levels.’
Monday is ‘increasingly catching up’ with the occupancy levels seen on Tuesdays, Wednesdays and Thursdays, he said.
And an ‘acute lack of supply’ has led to ‘strong rental tension’, pushing up prices and future profits, Carter said.
Companies seeking central London workspace are considering older buildings and less desirable locations.
Meanwhile, premium office blocks remain popular. Demand hit a record high in the year to the end of March.
British Land revised up the valuation of offices in the City by 1.8 per cent and in the West End by 0.4 per cent in the second half of the year.
This defied the ‘outdated narrative that the office market is struggling’, said Oli Creasey, head of property research at Quilter Cheviot.
A British Land spokesman said: ‘Many were convinced that work from home would be the norm [after Covid lockdowns]. We were not so sure.
‘We became increasingly convinced that we could generate good returns by making a contrarian position.’
The amount of office space rented in central London in the first three months of the year jumped to 2.1m sq ft – 29 per cent more than a year earlier.
British Land said it expects rents to grow by between 3 per cent and 5 per cent this year. Profits rose 4 per cent to £279million in the year to the end of March and revenue jumped 13 per cent to £454million.
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