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A new report suggests many City firms are reviewing their real estate.
Nearly three quarters of UK financial firms are reviewing their current office space requirements, particularly in insurance, finance houses and banking, according to a new study.
The Financial Services Survey report for quarter three of 2020 by Pwc and the CBI shows most of the reviewing seems to be driven by a desire to redefine or reconfigure use of existing office space (cited by 67% of companies) and/or reducing office space (62%).
It says that real estate investors are feeling increased pressure on their portfolios as their ability to collect commercial rents or exercise rights under the Commercial Rent Arrears Recovery procedure remain restricted until January 2021 due to Covid-19. And it notes that the pandemic has accelerated trends towards increased regional working and de-urbanisation and more collaboration between real estate and infrastructure investors across both the private and public sectors.
The report, which covers the different impact of the pandemic on different parts of the sector, advises employers to “strategically consider the optimal footprint needed to accommodate new working practices, whilst still maximising the impact of operations and collaboration”; and calls on investors to “swiftly consider the impact of demand and usage shifts on portfolio resilience and return” and strategise to mitigate the risk of obsolescence.
Meanwhile, a survey by the Institute of Directors shows the employment expectations of UK firms for the year ahead fell in September while investment expectations were also down. The survey showed that the top concern after the pandemic is uncertainty over Brexit. A separate survey from the Recruitment and Employment Confederation showed people were losing their jobs “rapidly” in September, causing a sharp increase in workers looking for new posts. It also shows that demand for employees in London continues to fall as the rest of the UK recovers.