The volume of floorspace available to be sublet from existing
occupiers in London has soared by 67% since lockdown began in March, Property Week can
reveal.
The
amount of so-called ‘grey space’ on the market in the capital has increased
from 3.02m sq ft in the middle of March to 5.03m sq ft at the start of October,
according to data collated by Savills.
Mat Oakley, director, commercial research at Savills, said the
volume of grey space on the market increased slowly during lockdown but then
grew quickly during the summer.
“It definitely accelerated,” he said. “At the start of lockdown,
there was about 3m sq ft of sublet space on the market in central London.
“By the beginning of June, it had edged up a bit but now, as of
the beginning of last week, we were up to just over 5m sq ft. We’ve added 2m
since the beginning of lockdown.”
Oakley added that there was no discernible pattern to which
sectors were seeking to shed space and that most spaces hitting the market were
relatively small.
“It’s still predominantly and comparatively small chunks,” he
said. “Around three quarters of it is in units of less than 15,000 sq ft. We
haven’t seen any really big corporate disposals. It’s a floor here, half a
floor there – that kind of quantum.”
Oakley added that while that remained the case the amount of
grey space on the market was unlikely to have an impact on rental levels in
London. However, he warned, that could change.
“If it keeps going at this rate and if we see bigger corporates
releasing bigger chunks of space, then you will get to a situation where you
will have some high-quality sublet space that is directly competing with
landlord-owned new-build space. And that’s when it will trigger falls in
rents.”
News of the increase in grey space comes after Property Week
reported in July that the number of ‘zombie occupiers’ – tenants with space
surplus to requirement – had risen dramatically during the crisis because
occupiers were rethinking their space requirements.