Dan Zakai is the Co-Founder and CEO of Mindspace, a global provider of boutique flexible spaces in 16 cities across Europe and the U.S.
In the early days of the Covid-19 pandemic, there were many predictions made that were immensely wrong. “A short two-week lockdown will flatten the curve.” “Production of a vaccine could take four years or more.” And, of course, “London as a city has lost its luster.”
We now know that although the pandemic has upended the way we work and the relationship we have with office spaces, London is just as desirable as ever. As vaccines help deliver a post-pandemic reality, London is, in many ways, in greater demand than before.
Three months ago, Boston Consulting Group and The Network surveyed 200,000 people across 190 countries. Echoing results in 2014 and again in 2018, London still remains the most favored city globally to move to and work in. Yes, the traditional 9-to-5 has been erased by Covid-19 and the feasibility of working from home, now proven, will continue to keep many workers on hybrid and non-traditional schedules for years or decades to come, but a city is much more than its rigid commuter schedule, and a global economic hub churns 24/7 anyway. Hybrid and non-traditional schedules that keep workers in and out of the city at all hours are, to a great extent, the ultimate asset for post-pandemic economic recovery.
Some are questioning the resilience of the Big Smoke as a section of its dwellers are reconsidering big-city life. This shows a woefully short-sighted understanding of what the city stands for and the role it plays in the global economy. London is a leading global market with investors from every corner of the earth. Its attraction is in its multiculturalism and its access to those working in many places and in many time zones.
It’s true that residential rents have dropped sharply during the last year. Some residents who lived in London chose to move out and instead purchase larger homes in the suburbs, or if their own job standing became unstable, moved back home to live with relatives — especially Millennials and Gen Z. The residential market and commercial market, however, seem to be operating in two separate spheres: Office rents have held steady and companies have not abandoned the city.
In fact, global property investors estimate that demand for premier office space in London will soon far outstrip supply, pushing up prices and raising the value of quality office locations. These investors only gained confidence during the pandemic, throughout which prime London assets demonstrated liquidity.
It’s no exaggeration to say there is now an increased desire for investors worldwide to cash in on this rush. The removal of the no-deal Brexit risk alone has turned fuel into fire and helped build immense momentum for the city’s grand revival. Moreover, the Mayor of London’s office has committed £544 million to create jobs and revitalize local areas.
I predict that the outskirts of the city, which holds that sweet spot of lower residential rent but still strong commercial markets, will also see growing demand. The increased prevalence of hybrid work structures, which ease commutes for further-flung employees, will help propel the rise of flex spaces as one of the greatest post-pandemic success stories. Businesses are not abandoning cities, but there will be appeal in reducing the footprint of their spaces. Small business owners will recover but will want to do so with caution, which translates into smaller headquarters and a release of long-term liabilities.
How does one align the anticipation for a revived London with the reality that businesses have been battered, work structures have been upended and the pandemic’s once-in-a-century impact has touched nearly every aspect of our lives? Having just arrived back from London, I’m hearing from many brokers that while the return to the office is most definitely on the rise, flex spaces are by far the most favored option right now. With that in mind, I predict that flex providers, not enterprises, will take over many of the high-rise office blocks in London. Older buildings with few or limited amenities will find themselves overshadowed by new construction with perks like gyms and work spaces. Design, with an emphasis on the aesthetic and a guarantee of sanitation and safety, will rule our consciousness.
London is on its way back. There’s no denying it, and its return will be grander — and more flexible — than ever.