The London office market is in flux. The return-to-the-office trend continues and many firms are demanding more space, particularly tech businesses as they ride high amid the AI boom.
Sky high: London is the world’s second most expensive city for office fit-outs after New York
The shortage of high-specification space in the city is well reported, and affordability is increasingly adding to this challenge.
Clients are having to make assumptions as they design future-proofed, resilient assets, so clarity from government on requirements like Minimum Energy Efficiency Standards (MEES) are welcome.
But in a premium market like London, most high-spec offices already far outperform minimum requirements – and in a way, that’s the problem.
According to our Global office fit-out cost guide, London is the second most expensive market for office fit-outs in the world, trailing only New York. Unnecessary future-proofing risks making matters worse, increasing costs and risks to delivery and eroding investor confidence.
This isn’t just about energy efficiency either. Designing in complex tech features may look like gold-plating on paper – and on the balance sheet – but in practice, occupiers often don’t use them enough or, in some cases, at all.
That doesn’t mean clients should resort to simple value engineering. But instead of automatically specifying a requirement of BREEAM ‘Outstanding’ certification, for example, developers need to truly understand what occupiers are looking for, so they can make more precise, targeted decisions, keep a handle on costs and keep schemes moving, while still delivering an attractive space and a valuable asset.
This understanding must be underpinned by evidence, through post-occupancy feedback and building performance data.
In a business and geopolitical environment where clients can’t control everything, it’s all the more important to focus on the things they can. Where developers can show they have made smart choices to meet proven needs, occupiers have more reason to commit, costs and risk are kept in check and investors have greater confidence that schemes are attractive and deliverable.
To capitalise on the demand for office space in a challenging market, we need to focus on rightsizing ambition.
Mark Lacey, head of UK markets, Turner & Townsend
