‘Thou shall not lose offices’ is a tried and tested planning mantra at the Corporation of London, which has served them well for decades and has enabled the City to maintain its status as a global economic powerhouse.

However, a confluence of planning, environmental, market and policy forces maybe combining to reshape the land use landscape in the square mile – these being 1) what the market wants from new office space 2) EPC ratings, 3) embodied carbon and the retention of buildings and 4) enticing people to the City. Let me elaborate –

1) getting people back to the office full time post covid hasn’t worked. We all want to keep flexible and work a bit from home. People generally want to come to the office less but when they do, they want to do it better and more beautifully. This has resulted in a two-tier office market. The best in class and Grade A space, which has excellent user facilities, amenities, and high levels of environmental performance is letting strongly. Everything else isn’t.

2) Tenants are increasingly concerned with energy costs and environmental efficiencies of the buildings they use. Occupiers and investors have ESG policies that demand the best and most efficient space. There is a lot of existing stock in the city, which does not and cannot meet these best-in-class criteria. These buildings could be described as secondary or tertiary stock. They may have a poor or lower EPC or other significant challenges in terms of their long-term function or practical utility. These office buildings are likely to require substantial investment to bring them up to a standard where they shall be legally lettable (EPC B by 2030) and in many instances such investment is not going to be viable without the land use of the building being changed and / or a redevelopment taking place.

3) it is becoming increasing difficult to secure planning permission for the demolition of buildings in the City (and indeed across London), owing to pertinent and greater consideration of embodied carbon and circular economy principles, the Corporation rightly leading at the vanguard of this critical issue. So, if you have an office building which is poor EPC and your investment to bring it up to a legally lettable EPC office standard is not viable, but you cannot knock it down to build a better one, what might you do to prevent it becoming a stranded asset?

4) lastly – how do you entice workers back to the city and move beyond the ‘TWATS’? How do you get the tube gate beeps up on all 5 days of the working week and at weekends? How do you encourage more children, families and tourists to the city? How do you persuade the thousands of visitors and Londoners walking the south bank to come across the bridges into the City at weekends? – Cue ‘Destination City’ a core and cross cutting policy objective active across the Corporations agenda now for a number of years and which seeks to get more different type of land use into the City, but where do all these new land uses get built in a highly compact, heavily developed and heritage constrained square mile?

The penny may recently have dropped. Recent empirical research, policy papers and meetings of the Local Plans Sub Planning and Transportation Committee (23rd May and 20th June 2023) indicates a broadening of Destination City objectives, to include greater consideration of different types of land uses, especially new commercial uses and hotels where these can support and be complementary to the wider office and commercial function of the City and to seek to deliver more of these uses even if these would result in a loss of existing office space. A hairline fracturing then of the first commandment rather than a full break? Let’s see. We anticipate more hotels and opportunities for investors over the next 6-12 months to acquire existing, perhaps poorer quality EPC office buildings and change their use to hotels, with bonus points for retention and retrofitting of physical fabric, especially where such buildings are located in and around Tower, St Paul’s and the Cultural Mile. The Corporation increasingly seem to recognise a vision for the City, which is more than just offices. More hotels = more tourists = more spending = more opportunities for retail, restaurants, pubs entertainment and other Class E uses = more street life, diversity, activity and things to do after work = more people enticed back to the office.

London in sunny June is a great place to be. The recent weeks have had life and energy on the streets. London increasingly feels like it is bouncing back. Look out for a more enriched, energised, active and economically competitive City, albeit one which may be less reliant on its offices than it may traditionally have been.