New starts on office buildings in London have risen by 10% between April and September this year, easing fears of a permanent slow down in demand. Construction Enquirer reports that the speculative appetite is also rising, proving that developers have decided that the switch to remote and hybrid working is having less impact than was originally predicted.

The director in real estate at Deloitte, Mike Cracknell, told the publication: “The volume of new starts points to the resilience of demand for offices, in spite of the dramatic shift in working practices in response to the pandemic and months of home working.”

He added: “The survey shows a rise in pre-lets of new construction starts with 19% observed this time, up from 10%. Alongside this, there have been high levels of speculative development – above the survey’s long-term average.”

Just 12 months ago, only 12% of developers thought that remote working practices would have no effect on demand for new office spaces, but that has now risen to 37%. Furthermore, 85% of new starts were speculative, proving that there is a new confidence about the future of rented urban workspace.

There is a small trend towards refurbishments, rather than new builds, and other environmentally friendly features. This is thought to be driven by the push towards more sustainable and carbon neutral construction practices, as demolishing buildings results in far higher levels of emissions.

The construction industry is striving to find ways of reducing its carbon footprint, in order to comply with the government’s legally binding target of achieving net zero by 2050. This is now backed up with a new target to cut carbon emissions by 68% compared with 1990 levels by 2030.

Developers of office and other commercial use space are also under pressure from corporate occupiers and investors to demonstrate the energy efficiency and sustainability of their buildings. Many companies now have environmental and social governance policies (ESG) in place, which have specific requirements with regard to CO2 emissions.

ESGs are becoming standard practice as a way of screening potential investments for many companies. A recent survey by Investopedia and Treehugger found that there was a 60% increase in interest in ESGs during 2020.

As world leaders grapple with the practical and financial complexities of moving away from fossil fuel, businesses are also seeking ways to adapt their policies and practices. They are keen to demonstrate efficient use of energy and ethical practices in the sourcing of

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materials, and the limiting of pollution and emissions.

Despite demand for office space bouncing back, developers acknowledge that usage patterns have changed. Many companies are looking for smaller spaces to rent, as some staff work from home, some or all of the time. Some buildings are being converted for mixed use, with a combination of retail, work, and even residential space.

Other companies are competing to make their offices more attractive places to be, in an effort to lure workers away from the comfort of their own homes. For example, the Evening Standard reports that the 1937 House of Fraser building on Oxford Street is due to undergo an £100 million upgrade.

Permission has been granted by Westminster City Council for the upper floors to be converted into office space, with a top floor restaurant providing 360 degree views of the area. A gym and a basement pool are also being added to the building.

West End Ward Councillor Tim Barnes said: “Oxford Street has suffered particularly badly during the pandemic, but Covid-19 just accelerated changes to retail habits that were already taking place. By investing in this flagship building and creating a vibrant mix of uses the vibrancy of Oxford Street can be assured for residents, visitors and workers.”

The Times reports that some companies, such as Goldman Sachs, are investing in rooftop gardens, planted with trees and flowers, to improve employee wellbeing and tempt staff back to the office. There is even a name for this new trend, biophilla, which sounds rather dodgy, but literally means a love of living things and nature.

It seems that the remote working boom revealed that people don’t care much about dress down Fridays, free snacks, or pool tables, but they do care about access to fresh air, and a sense that they’re working in a place that people enjoy spending time in. In conclusion, the future of the office is not redundant, but it is looking a little different.

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