Derwent London has released its results for 2020 and has indicated its confidence in the London office market, albeit with an acknowledgement that working practices are likely to remain changed for many.
The results show that office developer and investor Derwent has managed to receive 92% of its rental income despite the pandemic. The value of its portfolio has remained steady with a 3% slip to £5.4bn.
React News reports that chief executive Paul Williams has been "very encouraged" by appetite to return to the office and that in a tenant survey of Derwent's top 50% of tenants, all of them said they wanted to get back to the office.
Clearly however there will be some impact on the use and occupancy of office spaces following the pandemic and the Evening Standard reports that Williams added “Looking ahead in respect of changing working practices, we do believe businesses will adopt more agile working practices and, whilst we think this may reduce overall office demand to some degree, we do not believe the impact will be significant.”
Consistent with this confident outlook, the company is continuing progress with its development pipeline. Williams told React News that Derwent are focusing on a 'long life loose fit' model of building: adaptable space with good floor to ceiling heights, natural ventilation, generous amenities. The suggestion is that this space will have less desks and more meeting rooms. Derwent have just submitted a planning application for a 293,000 sq ft development at 19-35 Baker street W1 which it hopes to start work on in the second half of 2021.
Derwent have also indicated a desire to make further office buys. Williams told React News "Our aspiration will be to buy more if we can...at the moment there's no distress or bargains, but that wouldn't stop us buying the right product".
“Enquiries have definitely picked up, as have the viewings. We don’t have absolute certainty as to the date of getting back, but there is a strong desire to return. In a tenant survey of our top 50% of tenants, all of them said they wanted to get back into the office.”