The pandemic has created a rise in previously let commercial office space returning to the market, known as grey space, or tenant supply. This is the result of organisations reviewing their property footprint. Large city-based head offices are being replaced by the hub and spoke model. Currently around 30% of London office space to let is grey space.
This is not a new trend, with increases of tenant supply also occurring after the 2001/2 stock market crash and the 2008 recession.
But what happens to the resulting real estate? Tenants who no longer need their leased space can re-market it directly and sub-let. For potential tenants it’s often cheaper than full rent, a shorter time commitment and may come semi fitted out.
With the UK the leading market in the world for flexible workspace, is the natural answer to convert grey space to flex? Is it commercially viable and is it worth the original tenants investing in converting the space to successfully sublet?