Beware of investing in commercial property

With many companies are planning to adopt a “hybrid” working model once the pandemic is over, the market for office property is facing a reckoning.

City of London office blocks
The equivalent of 14 London skyscrapers-worth of floorspace is unwanted
(Image credit: © Getty Images/iStock)

The market for office property is facing a reckoning. Many companies are planning to adopt a “hybrid” working model once the pandemic is over, with weeks split between days in the office and days working from home. That means they will require less floorspace than before. A survey of Britain’s 258 biggest firms by PwC found that half have plans to “cut the size of their property portfolios”, says The Times. Planned reductions amount to “nine million sq ft” of space. That’s equivalent to 14 London skyscrapers-worth of floorspace that nobody wants.

“Globally, more than 103 million square feet of office space has already been vacated since the pandemic began”, according to data from broker Cushman & Wakefield, says The Economist. Moody’s Analytics thinks “roughly one in five offices in America will be empty in 2022”. Older buildings are particularly vulnerable. “Nearly two-thirds of commercial property in London” is over 20 years old.

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Markets editor

Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019. 

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere. 

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful. 

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.