We are in the midst of the next evolutionary cycle.

Enforced mass home-working caused by the pandemic has viscerally demonstrated that in today’s tech-infused world, knowledge-based ‘work’ need not necessarily be performed in an office. This has triggered public debate on what the future holds for offices and indeed whether they have a future at all. Our take on this is that office demand is evolving, not disappearing, bringing an unparalleled opportunity for long-term investment performance to those who act decisively with courage and conviction today. Now more than ever, it is vital that office investment, divestment and management decisions are correct.

Office occupier and investment activity since the pandemic began has been woeful. This is used by some as evidence that the office is dead. European take-up in 2020 fell 37% year-on-year according to CBRE. 

Investment volumes fell 21% according to RCA. Average vacancy rates have risen and income returns have fallen significantly as landlords battle just to maintain rents, let along grow them. Such data is backwards looking though, and given the magnitude of the pandemic it’s bound to paint a negative picture. Forward-looking indicators are more informative and suggest that the outlook for the office market is very positive, provided stock aligns with occupier demand.