The 2 Most Important Charts in Office Leasing & How to Respond to Them

By Mia Brown
News • Thoughts
31st August 22

They show key secular trends that landlords & their advisers must adapt to…

1.    Office Lease Lengths Are Getting Shorter

We knew this before the pandemic. Now leases are even shorter. In 2019, the average lease length was just over 6 years. During the pandemic, real-time metrics showed average lease lengths as low as 30 months (not including coworking).

The chart is trending downwards because of coworking, managed space, Cat A+, WFH, hybrid, and – most important – uncertainty.

When lease events are more frequent, there is more renegotiation, and your space will be on the market more often.

So buildings must always attract new customers, or even better, keep existing customers within their ecosystem at renewal, at higher rents…

How?

• Do the basics better than anyone
• Build deeper relationships with customers (meet them, email, market to them)
• Create an irresistible offer
• Invest in your marketing strategy

Now chart 2…

2.    Sustainable Buildings Are Worth More

Careful with this one – it’s not conclusive.

There is an emerging premium for green assets – investors will pay more for offices with higher BREEAM ratings, shown by the yield spread in Europe.

Knight Frank also found that BREEAM outstanding buildings achieved a 12.3% rental premium.

But new buildings are worth more AND they have the best BREEAM ratings. We don’t yet know which is more important – the data will be conclusive in a few years.

It is logical that investors & occupiers pay more for green buildings. The focus on CSR, ESG, the climate crisis, MEES regulations, and energy price inflation all feed this chart.

So try to make your building as green as possible. Then market those features:

• The ‘difficult’ & expensive things (retrofitting, increasing the EPC score)
• The ‘easier’ stuff (waste management, offsetting, community engagement, utility monitoring, etc)

In summary…

Monitor and adapt to these trends.

You’ll lease space faster, at a higher rent, and your buildings will be worth more.

Written By Jonathan Vanstone-Walker

Featured Stories & Insights

28th November 23

The Notebook: Zac Goodman on why there’s life after WeWork for flex offices

AS FEATURED IN CITY AM, Monday 27 November 2023  Where the City’s top thinkers get...

Read More
26th November 23

Case Study: How We Transformed a Century-Old Building into Tomorrow’s Workspace

This November, TSP celebrates the completion of 60 Ironmonger. Over the past 11 months, we...

Read More

17th November 23

Rockbourne Unplugged: A Tale of Leadership, Legacy, & Achieving Real Estate Excellence

Rockbourne is a business focused on Leadership & Future Leadership Search for real estate owners,...

Read More
1st November 23

Centenarian Workspaces: 6 Historic Offices Restored to Splendour

Zac Goodman, CEO, recently shared his insights in a Bloomberg feature: ‘When Recycling Comes to...

Read More
25th October 23

Maximise ROI: 5 Property Management Strategies That Add Long-Term Value

At TSP, we use the following five property management strategies to deliver high returns to...

Read More
20th October 23

Landlords: “Zoom out, take expert advice, listen to your gut”

An award-winning, modern real estate practice specialising in investment, development, leasing & occupier agency services...

Read More

View all

Let's Talk

Got a question? Use the form to get in touch.

    Sign up to our newsletter

    For updates on commercial property news and events.