The chief executive of one of the UK’s largest property companies has warned that demand for secondary office stock will plummet as a result of the Covid-19 pandemic.
Speaking to Property Week, Landsec’s chief executive Mark Allan said that demand for prime offices with the capacity to offer better air quality, outdoor space and more agile workspaces would rise, leading to less demand for secondary stock, which would see higher vacancy rates and more redevelopment activity.
“The older, secondary office stock will see more exposure [to the effects of coronavirus], and obsolescence is going to be a more rapid journey than it might have been before,” he said.
“[The coronavirus will] really accelerate existing structural trends. What might have taken five years could easily now play out in 12 months.”
However, Allan remained bullish on the prospects for the prime London office market, predicting demand for high-quality space would continue to grow.
Landsec
delivered its final year results this week, showing the value of its property
portfolio had taken a £1.2bn hit.