We’ve written a few times over the last couple of years about the ‘new normal’. The COVID-19 pandemic threw us all, there’s no question about that, and as the lockdown restrictions eased, we wondered if we’d ever repopulate the office at anything like the pre-pandemic levels of occupancy.
Companies like Mondelez and UBS were reviewing the ongoing need for vast amounts of central London space, and back in April 2020, former Barclays CEO Jez Staley famously said ‘the notion of putting 7,000 in a building may be a thing of the past.’
But, according to recent research published by Remit Consulting and KPMG, occupancy rates are on an upwards curve towards levels we haven’t seen since we were all banished to our back bedrooms and kitchen tables.
Remit Consulting is a international real estate-focused management consultancy, and their Return Report published in early January 2024 was cautiously optimistic talking about a return to the office and a positive trend in occupancy rates.
Aside from issues such as train strikes and seasonal dips, November 2023’s monthly average across the whole country was 33.8%, the highest rate since the study was started just after lockdown restrictions were eased, when the occupancy rate was a shade under 10%.
By way of comparison, Remit suggested that the pre-pandemic occupancy rates were between 60% and 80%.
In October 2023, London hit a record high occupancy rate of 50.9%, with the City and Docklands spiking above the national average.
Remit’s Lorna Landells said ‘The resilience of London’s West End is particularly striking, signalling a robust desire for the collaborative and social aspects of office life that this area provides. As businesses and employees strike a balance between remote and office-based work, we are seeing a redefined, more flexible approach to office use emerge.’
The report also points to the 74% occupancy rate in London-based Whitehall departments, which contrasts slightly with the Public & Commercial Services Union saying that there may be an exodus of civil servants due to the Government’s ‘everyone back in the office’ mandate. As is obvious, the sentiments surrounding whether people go back to the office, stay at home or develop a working and manageable hybrid of the two, are complex and unlikely to be resolved to everyone’s satisfaction any time soon.
These sentiments are echoed in the private sector. In Remit’s recent Office Worker Survey which analysed the preferences of UK office-based employees regarding their working environment, nearly 60% of respondents indicated that they would consider leaving their jobs if they were three-line whipped into returning to full-time office work.
Almost two-thirds of CEOs, according to KPMG’s CEO Outlook survey from October 2023, think so. At least by 2026.
The survey (of 1,300 global CEOs, of which 150 are in the UK) found that 63% of the UK-based bosses think that a full return to work could happen in the next 2-3 years. They also thought, to the tune of 83%, that such a return could be linked to promotions, bonuses and pay rises. Not rocket science, that’s for certain.
What’s clear is that there is no ‘one-size-fits-all’ solution, CEOs will have to work very carefully with all stakeholders to get an incredibly complex and fluid issue right.
Almost all surveys of this type in recent years have come to the unsurprising conclusion that very few employees have the desire to be back in their offices five days a week but could be lured back with the promise of remuneration and other incentives. This of course comes with its own risks regarding employment terms and other legal questions that have arisen from the pandemic. However it does seem that there are options available for companies to get their staff back into the office as if nothing had happened over the last four years.
Regardless of how long it takes to get back to pre-pandemic levels, what is clear is that occupancy rates are slowly going up and Lorna Landells thinks the numbers are on a ‘promising trajectory’.
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