Office landlords retain long-term optimism despite hu...

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.

In addition, some 25% say their office buildings do not currently generate a profit while 31% of landlords report struggling with rising debt repayments.

Meanwhile 20% are unsure if they will be able to afford to pay off the debt secured on their commercial properties, and 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, chief executive of infinitSpace, comments: "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 recognise, the office market has a bright future ahead.

“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 under-utilised 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.”