Working remotely from suburban shared workspace allows savings to be unlocked for service sector employers and their employees but could see the value of central London's office market fall by as much as 25% over the next 10 years, Fitch Ratings said in its latest report on disruptive technologies.
In London, remote work is enjoying strengthening tailwinds from wider cultural, political and technological forces. Firms that adopt this are able to downsize expensive office space, the effect of which on central London office markets could see as much as 25% eventually being shaved off aggregate value. Fitch does not expect major credit implications, however, as most lenders will have lead time to adjust underwriting before the full effects would be expected to feed through.
The ratings firm reported: ‘In our 10-year ‘disruptive case’ analysis we assess the impact of 332,500 central London employees moving into shared workspaces on a routine basis. Such a transition, we believe, would be staggered by the rate of lease roll-offs among employers amenable to changing work patterns. Without a sudden reduction in occupancy, central London office markets are likely to remain under-supplied, underpinning very high rents - and therefore the basic push factor out of the centre. This also suggests London's central business district (CBD) could become gradually more available for uses besides offices.