Will office work return to revive the London rental market?

Fresh data from Knight Frank shows how uncertainty continues to dog the lettings market in some parts of central London.

There appears little consensus in the corporate world on how quickly or to what extent workers should return to the office. While some companies are encouraging employees to return over the next few months, others have said working from home will become the norm.

But Knight Frank says that despite the mixed messages, there are signs of improvements in the rental markets near London’s two main financial districts - the City and Canary Wharf.

The number of properties that rented in April this year compared to March 2020 in these locations increased by 21 per cent. The areas included E14, the Southbank, Wapping, Shad Thames, south Islington, E1, E2, E3 and the square mile itself. The number rose to 982 from 811 according to OnTheMarket data.

By comparison, the number of properties rented in the two central London boroughs of Westminster and Kensington & Chelsea rose by 2.7 per cent over the same period, from 694 to 713. While the number in Westminster increased by 5.1 per cent, the figure was 1.1 per cent down in Kensington & Chelsea. 

Across the whole of London, there was a substantial decline of 12.5 per cent.

“Activity has picked up in recent months as a shift in mind-set has taken place” insists Jon Reynolds head of lettings for the City and East region of London at Knight Frank. 

“Last summer people may have thought there would be a fundamental change to their patterns of work. In many cases there has been a realisation they will be in the office at least three or four days and working from home is the exception not the rule. Many tenants have therefore decided to get on with their move now because a surge in demand may be coming this summer.”

He says interesting trends include the fact that many tenants have moved further into central London as a result of falling rents over the last 12 months, and many younger workers in particular have been keen to take advantage of the fact they can walk to work - even stating this as an objective of choosing specific properties. 

However, Knight Frank concludes that as companies encourage workers to return at different speeds, we are unlikely to know for 12 months with any clarity how commuting habits will change in the longer-term after the pandemic.