“The whole is greater than the sum of its parts.”For a nation battling with working-from-home fatigue, this statement from Aristotle takes on a new meaning. As we edge closer to the anniversary of the UK’s first lockdown, office-based professionals are desperate to regroup with colleagues.

Despite chatter about ‘the death of the office’, working from home, for some, simply underscores the importance of working from the office. As such, for investors keen to look beyond lockdown 3.0 and to the in-bound opportunities, there is activity in the making and Q1 and Q2 is the time to keep your eyes peeled.

Positive market murmurs

We have begun to hear some rather less negative talk across the London office market. Before Christmas, peers noted that some grade A offices were reporting an increase in tenant enquiries. This concerned a group of largely branded offices in well-established business areas in London such as King’s Cross and Farringdon, which have well-connected national and international transport links nearby and are equipped with a wide variety of amenities that suit the modern-day professional, such as breakout areas and fitness spaces. There were also signs that an increasing number of tenants were taking the opportunity to upgrade to better-quality space and to accommodate for social distancing. Clearly, high-end spaces that incentivise workers to return post lockdown may well be in demand in 2021. 

Now, post Christmas and set against the backdrop of the vaccination rollout, we are seeing peers, clients and colleagues determined to be forward-looking. Despite another lockdown, some areas of the market seem to be focusing on the light at the end of the covid tunnel, resolute that activity will not stall as it did last March.

For those with this positive outlook, there are pockets of opportunity early this year. In addition to demand for the ‘best in class’ assets mentioned above, mid-market stock should also be keenly watched by investors. Last year, there were good (not great) offices –

which lacked the critical health and safety and wellness ‘bells and whistles’ required in a post-lockdown era – which still came with large pre-pandemic price tags. However, we expect a correction in this pricing in Q1 and Q2, as costs finally come down to reflect current market demand. As such, if there was ever a time to secure fairly priced deals and drive returns, it is in the months ahead.

What next?

Once assets have been secured at these revised prices, there is real opportunity for investors to drive returns by repositioning properties to align with tenants’ evolving expectations of the workplace in the wake of covid-19.

We all know that the market’s understanding of ‘top-tier’ office stock has undergone a significant shift. A year ago, spaces with a quality design, on-site food and beverage amenities, and good transport links were all the rage. However, in the context of covid-19, offices must now act primarily as a safe haven for occupiers, with wellness being up there as a prime consideration. What’s more, after nearly a year of home-working, employees have become accustomed to their newfound working from home rituals, so spaces need to incorporate enhanced reasons for occupation to encourage some employees who like the flexibility of home away from the kitchen table.

To create these kinds of hubs that address all new occupier requirements, buildings must have improved health and safety provisions, such as high-tech air ventilation systems and cleaning facilities; spaces for colleagues to collaborate; fitness facilities; increased communication infrastructure; extended cycle storage and drying facilities that allow workers to avoid public transport; electric car and scooter charging; and updated food and beverage outlets. For the office occupier of 2021 and beyond, these will be non-negotiables. By investing a little extra to update an asset now, so it reflects occupiers’ new demands, there is real scope to create a truly wanted product post lockdown and drive serious returns in London in the long term.

As we edge towards spring – longer days, warmer temperatures, and the hope of easing restrictions – now is the time for positivity. Offices will see their day again, and eagle-eyed investors who act now could be at the epicentre of the comeback.