What’s Going On Here?Data out on Monday showed a record number of companies signed leases for major London office space for the first time. What Does This Mean?The arrival of the pandemic brought with it the dizzying revelation that you can do your job just as well without spending two hours on a train every day. So employers, the theory went, wouldn’t want city-based HQs at all, opting to open satellite offices instead. But according to analysis from UK real estate company Cushman & Wakefield, that’s not the case: a record number of businesses signed their first major lease in London last year. A third of those were businesses relocating from outside London, while the rest were wet-behind-the-ears startups. There’s apparently still a lot of demand for modern high-spec space too, with Google, TikTok, and more still willing to pay eye-watering rent for prime sites. Why Should I Care?The bigger picture: Landlord have mercy.
It’s true that overall occupancy rates are expected to stay well below the pre-pandemic average, as companies continue to let staff work from home for at least some of the week. But this data will still come as a relief to London landlords: it means workers will be incentivized to stay within commuting distance of the office, which should help prop up demand for properties to rent and buy.
Zooming out: Productivity pays.
London’s appeal to startups and Big Tech is part of the reason that the city’s productivity – that is, the economic output per worker – is so much higher than it is elsewhere in the UK. But the city still can’t bring up the overall average to match the US, where an hour of work is estimated to generate around $70 compared to the UK’s $60. That matters because productivity drives long-term economic growth, which is why UK economists all agree that improving the figure is crucial to get the country’s economy back on track. | 