The Lure of the Super Prime
The Lure of the Super Prime Commercial Space
Office staff are being drawn to firms who have prime property investments, who can offer them top-tier Class A offices, packed with perks, as they return to the workplace.
Recent data from Transport for London is showing that tube journeys are at around 80% of pre-pandemic levels, indicating that even with more people than ever choosing hybrid working, the vast majority have a primary base within an office setting. To lure workers back – and retain the best staff for longer – gone are the days of minimal offerings in second-tier spaces; bike storage, some communal recreation space, and a well-stocked fridge.
Now, office workers are expecting – and receiving – more, pushing up demand for the very best quality commercial offerings. The key takeaways from JLL’s The Future of Work Survey 2022 concluded that “hybrid working is here to stay and calls for the rejuvenation of the office”, while 77% of participants of their global survey of 1,095 decision-makers across 13 markets agreed that “investing in quality space is a greater priority than increasing total space occupied”. 72% of the respondents also agreed that in the long term, the office will remain central to their organisation’s work ecosystem.
With this in mind, the office is fast becoming a hub for collaboration, networking and socialising. When in the office staff members expect the comforts of home and more, leading to a spike in interest for Super Prime opportunities in key locations. These might offer anything from wellness and spa-like facilities to screening rooms, landscaped terraces and socialising spaces that rival many destinations.
Future-proofed sustainable settings, and adherence to the latest ESG principles and codes also remain at the forefront of the minds of many companies returning to the office, reversing the previous trends towards the lower-end of the market, and putting a strain on the supply of prime accommodation in London. This means that landlords holding assets that meet future energy efficiency standards are in a strong position and should be immune to the downturn being experienced by the rest of the market.
With an emergence of two markets, with prices expected to be protected in the luxury and highly sustainable segment, and those with lower quality specifications and energy efficiency suffering the brunt of any market dip, many are expecting the very best commercial real estate to be in high demand.
2023 is likely to be a pivotal year in the post-pandemic real estate landscape – a “year of the catch-up” as coined in Deloitte’s latest biannual Crane Survey, which assesses the development of London offices, and forecasts that the development pipeline will grow this year with significant prime property investment development completions. For those landlords unable to offer what the market is now demanding, prime property investments – or lagging behind in developing their portfolios to match these needs – they stand to lose out. But for the true best-in-class propositions, the future is looking bright.
Published: April 28 2023
Author: Alexandre Piechaud