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Office Landlords Risk Closure as They Combat Challenging Market Conditions

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A new survey of 250 UK office landlords commissioned by workspace provider infinitSpace has found that:

  • 14% say their office buildings are at risk of closing in the next five years due to affordability concerns.
  • 25% say their office buildings do not currently generate a profit.
  • 31% of landlords report struggling with rising debt repayments.
  • 20% are unsure if they will be able to afford to pay off the debt secured on their commercial properties.
  • 48% say high inflation has made their properties’ ongoing operational costs difficult to manage.

More than one-in-seven office landlords say their office buildings are at risk of closing in the next five years due to affordability concerns, new independent research from infinitSpace has revealed.

This comes as a quarter (25%) say their office buildings do not currently generate a profit and a third (31%) of office landlords report struggling with rising debt repayments. Moreover, a fifth (20%) lack confidence that they will be able to afford to pay off the debt secured on their commercial properties.

Meanwhile, nearly half (48%) say high inflation has made their properties’ ongoing operational costs difficult to manage.

Some landlords have already taken action to mitigate the damage caused by the challenging economic climate. 17% have already or are planning to sell off office buildings to remain buoyant, while a fifth (20%) have been forced to make redundancies in the past two years.

Despite these challenges, many landlords expressed optimism for the future of the market, with half (50%) of respondents feeling confident in the financial performance of their office building portfolios over the next five years. Meanwhile, 61% believe office occupancy rates will increase over the same period of time.

Wybo Wijnbergen, CEO of infinitSpace, commented: “Office landlords are facing a worrying array of financial challenges. The high cost of borrowing has put immense pressure on the industry, only compounded by high inflation, which has made operational costs difficult to manage. So, it’s no surprise that many feel uncertainty about the current state of affairs for their portfolios.

“The intent of sharing this research is not to fearmonger, but to raise awareness and highlight that, despite these challenges, hope is not lost. In fact, as many respondents seem to recognize, the office market has a bright future ahead.

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“We must remember that redundancies and closures may protect a portfolio in the short term, but they won’t address the root cause– landlords have plenty of other tools in their kit to futureproof their assets.

“A strategic, future-focused approach that taps into market demand is key. Looking into converting underutilized properties into other real estate types with the help of third-party providers can equip landlords to thrive in the rapidly evolving workspace landscape, helping them secure a more stable financial future.”

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About infinitSpace

infinitSpace creates and manages tech-enabled white-label flexible workspaces on behalf of commercial landlords. It aims to empower human endeavorr by bringing together local communities in world-class spaces that have customized curated services and high-spec technology.

It operates its own flexible workspace brand – beyond – which landlords can choose to adopt for their own buildings. Alternatively, infinitSpace can create white-label brands and technology, allowing landlords to collaborate in choosing the exact make-up of their workspace.

About the research

The market research was carried out in May 2024 among 250 landlords with UK office properties via an online survey by independent market research agency Censuswide. Censuswide abides by and employs members of the Market Research Society which is based on the ESOMAR principles. Its MRS membership means that it adheres to strict guidelines regarding all phases of research, including research design and data collection; communicating with respondents; conducting fieldwork; analysis and reporting; data storage. The data sample is fully nationally representative, ensuring the respondents are weighted by age, gender, region, employment status and political views.

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