Hybrid hinders London commercial space as John Lewis slashes head office value by £15.6m
The John Lewis Partnership (JLP) has slashed the value of its London head office by £15.6m in the latest signal that hybrid working trends continue to hinder the capital’s commercial work space.
It comes as last month the retail group revealed that it was ending the lease on its head office in Victoria, London as it no longer needed such a large space following a surge in home-working post pandemic.
The troubled retailer, which made a £234m loss last year, also revealed in account filings, first seen by The Times that it reduced the number of offices it uses at its Bracknell site due to its new ‘blended work’ policy.
“We said more than a year ago that we were moving to a blended working model across our offices. This means like many businesses, we don’t need as much space now we have a blended approach to working,” a JLP spokesperson said.
“In 2022, we negotiated the early surrender of the leasehold interest in the London office. In 2023, we recognised an impairment charge of £15.6m, following the announcement to close seven floors of our London office and to revise the use of our Bracknell office buildings. The impairment is simply down to using less space.”
Hybrid working was made popular by the pandemic when it was encouraged by governments to stay inside and limit interaction with people.
However, despite businesses fully reopening the trend has remained with staff still largely splitting their time between the office and home – with many reporting that the balance has improved their wellbeing.
It has had an impact on commercial office space, a report by Savills released in March showed that London offices in the City had a 48 per cent occupancy rate and the West-End had a 50 per cent occupancy rate – this is compared to a 60 per cent rate in rival cities such as Paris.
However, it appears that there has been signs of improvement in recent months, with the boss of London’s oldest office provider Argyll revealing he noticed“unprecedented” levels of office occupancy in the last six months.
Speaking to City A.M, Argyll chief executive John Drover said that rates of occupancy had reached 90 per cent, with the firm seeing a 26 per cent uptick in clients.