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London’s Empty Office Space Hits Highest Level in 15 Years

London’s Empty Office Space Hits Highest Level in 15 Years
A pedestrian stands on the Thames Path in view of Tower Bridge in the City of London, U.K., on Monday, March 8, 2021. Values in the U.K. capital should jump about 25% over the next five years, outpacing other European capitals, according to DWS researchers. Photographer: Jason Alden/Bloomberg

Office availability in central London is at its highest level in more than 15 years, the latest sign of how the pandemic-driven shift to remote working is upending demand for commercial property.

Availability was close to 31 million square feet in August 2022, according to real-estate data and information company CoStar. That’s the equivalent of about 60 Gherkin skyscrapers, and is up 51% from the 20 million square feet that was available at the end of 2019. Roughly 5 million square feet is marketed by tenants for sublease.

The last time there was close to this much empty space, office values plunged, causing billions in commercial real estate loans to sour. Availability in the aftermath of the global financial crisis peaked at 28 million square feet in mid-2009, according to CoStar, whose dataset goes back to 2005. The amount of square footage available in the capital has continued to rise this year, although at a slower pace than in the previous two years, CoStar found.

The data is also likely to worry those bosses who have been pushing for a widespread return to the office. Right now less than half of workers in the UK’s banking sector go into the office on an average day, and less than a fifth of insurance sector employees do so, according to a survey by consultancy Advanced Workplace Associates.

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