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Home Daily Digest CRE

London And New York’s Office Markets Are Making A Comeback

London and New York City’s office markets are finally seeing recovery as people trickle back into the workplace, but landlords must do more to reach pre-pandemic levels.

byAayat Ali
February 1, 2022
in CRE
Reading Time: 2 mins read
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London And New York’s Office Markets Are Making A Comeback
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London and New York City are facing similar challenges in bringing workers back into the office, even sharing a closely related recovery trajectory. 

Although remote working has become a must-have for many professionals, occupancy levels and public transport usage has increased alongside the shift to more flexible work arrangements according to Bill Sexton, CEO of Trimont Real Estate Advisors. 

Despite experiencing a lag in recovery, the two cities have finally started to see an uptick in leases. For instance, Google purchased London’s Central Saint Giles building earlier this year for $1 billion, as well as Manhattan’s St. John’s Terminal Building for $2.1 billion last September. 

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In London, investment sales grew to $14.9 billion last year compared to the $10.1 billion seen in 2020. While this is still below the 10-year average of $18.9 billion, this shows progress.  

Additionally, London office investment was 68% above the levels seen in 2020. 

“Gradually, it is stepping back up,” said James Beckham, managing director of investment properties at CBRE in London. “We think this year it will get back to normal, even with some of the travel restrictions remaining in place.”   

At the moment, total leasing volume in London is up 88% compared to 2020, but still 12% lower than the 10-year average. 

In New York, the office market picked up the pace towards the end of 2021, with leasing activity seeing its highest levels since the onset of the pandemic. Office demand clocked in at 9.3 million square feet during the final quarter of 2021, which is up 20.8% from the third quarter of that year. 

Following Labor Day in September, office occupancy steadily increased to a peak of 37% on December 1. However, the Omicron variant caused numbers to fall again as people shifted back to working from home. 

In order to lure tenants back into building, landlords have ramped up their sustainability efforts and high-quality amenities. 

“Landlords and occupiers are having to think of new and different ways to make the office space more attractive to their staff, recognizing that the office space has to offer something different from the home environment,” said Sexton. 

Source: Commercial Observer
Tags: CRE
Aayat Ali

Aayat Ali

Aayat is an editor for the Daily Digest based in Lexington, Kentucky. She has worked with local coworking spaces since August of 2017 and enjoys taking her firsthand knowledge to write about the fascinating, constantly evolving world of flexible workspaces.

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