The Crown Estate says more workers returning to West End offices
The Crown Estate, which runs the Queen’s land and property empire, has seen occupancy at its West End office buildings improve but they are still only close to a quarter full.
The update came as chief executive Dan Labbad warned the company, which also owns sites outside of the capital, is “under no illusions” about the challenges it faces, as the pandemic continues to disrupt the property market.
Like other landlords, the property group has seen a number of its office tenants have staff working from home since the Covid-19 lockdown started in March.
The Crown Estate said average occupancy across all its London office buildings towards the end of August was between 10-15%. It added that this is increasing gradually - heading towards 20-25%.
The landlord has over 5 million square feet of offices in its central London portfolio.
Labbad said: “As a global city, London will continue to be an office destination. However we know the office market will need to change, as people and organisations increasingly adopt the hybrid of working between home and office.”
He added: “Whereas office demand has traditionally been driven by peak workforce forecasts, our initial thinking is that occupiers will be looking for less relative and more flexible space, and more diverse amenities. It is now up to land owners, like The Crown Estate, to take the opportunity to work with office customers to innovate, providing new products that meet the demands of business in a post Covid world.”
The Crown Estate has also seen a number of retail and hospitality businesses across the London estate struggle due to closures in the lockdown, and weaker footfall since reopening.
Support has been offered to some occupiers, including a move to turnover-based rents, rent-free periods, and staggered rent payments.
Boss Labbad said: “As we look ahead we are under no illusions about the challenges we face. Whilst it is too early to accurately forecast our performance for next year, we do expect our net revenue profit and property valuations to be significantly down.
However, our resilient structure, established to operate in perpetuity and with no debt, coupled with our diverse portfolio, provides us with the means to navigate this current crisis, while continuing to invest for the long term.”
The value of The Crown Estate’s property portfolio decreased 1.2% to £13.4 billion in the year to March 2020.
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