The shift away from home working is breathing new life into the UK’s commercial property sector, with Savills forecasting a robust 2025 fuelled by cheaper finance, a push for sustainability, and a growing return to office desks.
The FTSE 250-listed firm told investors this morning that despite lingering challenges, “most markets are in recovery,” though geopolitical tensions, volatile bond yields, and stubbornly high interest rates have tempered the upswing, making it “somewhat shallower than expected.”
Savills remains upbeat, pointing to brighter prospects ahead.
“Whilst current financial markets are characterised by uncertainty, sentiment has turned to expectations of progressive reductions in the cost of capital being likely during the year,” the company stated. “We expect re-financing-driven activity, the sustainability agenda and the trend towards corporates requiring greater office attendance for staff, to continue to be positive for transaction volumes… These factors lead us to expect continued improvement through 2025.”
The retreat from remote work has tangible roots. John Dawson, founder of Core Loft Conversions, recalled the Covid-era boom in home office conversions.
“At the peak of Covid, we were getting around 15-30 calls per day from regions around the UK that would normally have zero demand for a loft conversion,” he said. “But thankfully things have calmed down as we went through a period of tyre kickers and trying to hire extra staff to keep up with demand.” Now, firms like WPP, Lloyds, and the civil service are nudging staff back to the office, with varying degrees of uptake.
London’s office market is feeling the shift. Savills reported in August that central London’s vacancy rate dipped to 8.8%, the lowest in over three years, while Avison Young noted in November that third-quarter take-up hit 3.2 million square feet, trimming vacancies to 6.9%—a 0.2% drop from the prior quarter, edging closer to the 10-year average.
Demand for eco-friendly buildings is a key driver, with half of London’s offices facing obsolescence by 2027 due to stricter environmental rules.
The trend aligns with insights from major players like Shaftesbury Capital, the West End’s largest landlord, and Landsec, both of whom see a tilt toward sustainable, tech-savvy workspaces.
Landsec cautioned, however, that the pace could hinge on financing conditions.
“The good availability of credit remains supportive to this [trend], although we are mindful that changes in longer-term interest rates will likely influence the pace at which momentum improves from here,” the trust remarked. As remote working wanes, the office market’s revival is gaining ground—albeit with a wary eye on economic currents.