How London could become ghost town after rise of work-from-home culture leaves office blocks empty
HUGE swathes of space in some of London’s most expensive office blocks stand empty – the multi-million pound legacy of the nation’s new working-from-home culture.
Figures reveal that one skyscraper built during the lockdowns which crippled Britain’s financial centre currently has almost A THIRD of its floor space unoccupied — the equivalent of three football pitches.
Work on the 51-storey building at 8 Bishopsgate began in 2019 and was completed earlier this year.
But 32 per cent of its floor space remains unoccupied.
And the problem has hit cities across the UK as workers stay away from the office, continuing the trend sparked by Covid lockdowns.
Currently, the City of London has a property vacancy rate of almost 12 per cent — up from seven per cent before the pandemic — sparking fears it could lead to our financial centre becoming a ghost town.
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Mark Stansfield, senior director of UK analytics at property information group CoStar said: “The office vacancy rate in the City of London has risen sharply in recent years.
Ending leases early
“The more widespread adoption of hybrid working (where staff split their week between shifts in the office and at home) has undoubtedly played a part in this.”
At the nearby 36-floor Podium at Citypoint, valued at £560million, the situation is even more grim — with 36 per cent of space up for rent.
Since 2000, property developers — backed by huge funds from Chinese, Middle Eastern and US investors — have built vast towers such as the landmark Walkie Talkie and the Gherkin building, transforming the skyline of London’s financial district.
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Most of these well-known blocks remain full.
But in the wake of Covid, some multi-national firms are now ending their leases early.
Last month it was revealed that Facebook and Instagram owner Meta had paid £149million to break its 18-year contract on new London offices — before it has even moved in.
The tech firm had committed to the site at 1 Triton Square, near Regent’s Park, just two years earlier.
Owner and developer British Land said that Meta had surrendered the lease on one of two buildings it rents there — and admitted the U-turn would hit earnings for the six months to March.
Meanwhile, at the £195million, 46-storey Heron Tower — now known as Salesforce Tower — 19 per cent of the office space is unoccupied, while 11 per cent of the £400million building yards at 22 Bishopsgate, which was completed in 2020 — the year of the first Covid lockdown — remains unfilled.
In the Docklands area — home to dozens of banks and financial firms — the famous Canary Wharf tower currently has 20 per cent of its office space up for rent.
HSBC Bank, which has occupied a tower there for 20 years, has revealed it will quit the site in 2028.
And other banks, such as Barclays, Citigroup and Societe Generale, are reducing the space they have and subletting.
As a result, more and more companies are now redoubling their efforts to get staff back to the office.
But the shift to working from home has meant that, for much of the week, the floors of these skyscrapers are almost deserted.
Canary Wharf Group chiefs are trying to lure tenant businesses and make it more tempting to workers to return to the office by creating attractions such as roof gardens, plus more restaurants and shops.
Britain’s major cities are suffering a downturn as well.
In Manchester, the Co-op spent £100million on a 14-storey HQ before the pandemic.
But remote working has meant that some floors of the building remain empty.
Co-op has struggled to sublet its floors to other tenants and this has shaved £45million off the value of the building.
Property agent CBRE is now marketing the property to investors at £165million, compared to £210million a year ago.
In total, there are 102million square feet of empty offices across the UK, according to CoStar.
A third of that space is in London.
‘We don’t see regulars’
And a total of 15million square feet — the equivalent of 263 football pitches — sits empty in Manchester, Birmingham and Glasgow.
Property experts believe that some of the most ambitious plans for new office developments in the UK will be delayed for years and may never see the light of day because demand is so low.
Building firms require serious financial backing to raise new office towers.
And experts say that, among a lot of them, “office” has now become a dirty word.
“Many of the biggest players won’t touch them with a barge pole,” said David Hatcher, editorial director at React Property, a real estate news service.
On a sunny autumn Friday when The Sun on Sunday visited, the City was deserted.
At the Blank Street coffee shop on Eastcheap, there was just one other customer.
“It’s definitely much quieter on Fridays — the work from home mindset has totally altered the week,” shift manager Jodie Collins said.
“On Thursdays we have a queue out the door.
“But on Fridays we have maybe a third of the normal business.
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“If our regulars work in recruitment on Fridays, we don’t see them at all.”
The Sun on Sunday contacted the companies managing 8 Bishopsgate, the Podium at Citypoint, Salesforce Tower and 22 Bishopsgate for comment.