London’s office market has entered a “rental recession,” with the share of empty space hitting its highest level in three decades.
It is estimated that utilization of the city’s offices has fallen 20% since the end of 2019 as remote and hybrid work flourished.
Vacancies in London accounted for 10% of the area’s total office space, while in the West End, that number stood at 7%. In Canary Wharf, a newer financial district, vacant units exceed 20%.
Office vacancies have now reached a “tipping point” beyond which rents typically start to fall, prompting it to downgrade the stock of four big-cap property developers Monday, including British Land and Derwent London.
The tech firm Meta agreed to pay £149 million this Monday to break its lease on a 310,000-square-foot office near London’s Regent’s Park.
The move is expected to reduce British Land’s earnings per share by around 0.6 pence for six months.
Meta’s downsizing comes three months after HSBC announced plans to move out of its global headquarters in Canary Wharf and take up a much smaller building closer to London’s city center.
Clifford Chance is also due to leave the estate by 2028 to return to a smaller location, also in the City.