By Paula Planelles Manzanaro Property Correspondent
Economic difficulties have caused businesses to cut the amount of office space per worker in London’s Square Mile, according to a report published by DTZ. The report unveils that a “space efficiency drive” by tenants led to a 7.3pc slump in occupancy costs.
The annual occupancy cost on average in the City, which includes maintenance expenses, rents and property taxes, is now £8,720 per work station, namely, the space office that a worker needs, according to the study.
The average work station is now 10 sq metres, whereas it was 11 sq m in 2010. There is a meaningful difference, compared with other cities such as New York, where the office space per worker is more than double than in London, 20.9 sq m.
Karine Woodford, head of occupier research at DTZ, stated: “Cost-cutting has returned in a big way, with occupiers awaiting developments in the Eurozone and looking to reduce space per employee. Consolidation has been a theme, particularly within the banking and insurance sectors”. In this sense, the space per officer in insurance groups and banks is even smaller, with an average 8 sq m per employee.
The cutting in office space can be seen as an evidence of the difficulties that the British property market faces. Hans Vrensen, global head of research at DTZ, explained the reason and affirmed that it is just a temporary situation: “This is more about companies looking for cost savings wherever they can. It does not mean it will be a permanent feature of the market. As economic growth returns, companies will grow again and [demand] may not remain at the current level”, he said.
According to Mr. Vrensen, the City just needs the recovery of confidence in property market to become one of the fastest-growing subsectors. He also forecasted that work station in the City could increase up to £10,400 on average by 2016.
Most of the areas in the country have seen a slump in occupancy costs, with the biggest one registered in Birmingham (11.5pc). On the contrary, costs in West End rose by 12.5c due to a lack of supply.