Businesses that cut back on their offices during the pandemic are now scrambling to find larger premises as the return-to-office trend gathers pace – but prime space is in short supply.
After years of assuming hybrid working would permanently shrink their need for desks, bosses are increasingly bringing staff back more regularly. The result is a surge in demand for bigger, modern offices that has caught many firms short.
One national consulting executive admitted he had misjudged the future of working life: “In lockdown I had to look into a crystal ball and predict our future ways of working and got it wrong.”
Stephen Inglis, chief executive of Regional Reit, which owns office blocks across the UK outside London, said even corporate giants have found themselves squeezed. Deloitte, the Big Four accountancy firm, was among those to cut too far, he suggested.
“They probably downsized too much, as did some of the banks, and they have some of the biggest office requirements in the market just now,” Inglis said. “Most businesses want to be in the very best space. But we’ve run out. There is little to no ‘prime’ space available in regional cities.”
The shortage is partly a consequence of a pandemic-era freeze in construction, when developers were reluctant to speculate on the future of the office market. Combined with today’s “flight to quality” – where companies prioritise newer, eco-friendly buildings to attract staff back in – supply has been outstripped.
As a result, firms are increasingly settling for refurbished secondary offices. “We’re spending more money refurbishing our portfolio,” Inglis said. “Even some of the buildings we identified for sale, we’ve had approaches from tenants. That tells me the strength of the market.”
The shift underscores how the narrative around working from home has changed. Once hailed as the new normal, homeworking has been gradually scaled back by employers seeking collaboration, culture and productivity gains. But for companies that banked on smaller footprints, the race for bigger offices may now prove costly – especially as prime space becomes scarcer and rents rise.
