The Covid-19 pandemic has seen over a million sq ft of requirements for office space put on hold by occupiers in the M25 market according to the latest research by property agents Knight Frank.
The firm’s “M25 Offices” report for July 2020, looks at the first half of the year and considered the wider impact of Covid-19 on the office sector as a whole and highlighted that demand for office space in the M25 market fell to a record low of 4.0 million sq ft during the first few months of the pandemic, which is 1.7 million sq ft lower than seen in the aftermath of the Global Financial Crisis a decade ago.
The report states that “take-up in the South East since the announcement of lockdown up to the end of Q2 is 713,400 sq ft. For context, this is 19% below a typical quarterly average. With only 22% of this total registered after April though, it is clear that the majority of transactions were close to finalising before capital expenditure halted and restrictions on movement hindered viewings and inspections.”
Knight Frank’s report confirms that, while some transactions have collapsed due to occupiers withdrawing from deals before contracts were signed, these were “mostly in the sub 10,000 sq ft category. Cancellations total just 55,000 sq ft over the period since lockdown.”
In her foreword to the report, Emma Goodford, head of national offices at Knight Frank, stated “Undoubtedly, we are now entering a period of significant change and thus great uncertainty. One characteristic of the M25 and wider South East market, that has been consistent throughout time, is the ability to adapt and reinvent. Moments of crisis have historically served as an impetus for innovation. A retrospective view in years to come, will again show this to be true.”