COVID and Office rentals for Acquisitions

This topic contains 2 replies, has 3 voices, and was last updated by  Gina Miele 1 year, 1 month ago.

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    Denise Gingolaski

    How has COVID affected deals where office space is rented? In my company, most of us are working from home and the rental spaces remain vacant. Some of our smaller offices have not renewed leases.

    I am wondering what issues the vacant office space is creating for acquisitions or dispositions.


    Shariq Akber

    Dear Denise,
    A very good topic you have raised here. The company I work for specializes in operating serviced apartments and hotels. Currently we are in contact with many landlords who own office blocks but now the vacancy rates has jumped to almost 70% since COVID. We are proposing the conversion of the office spaces into serviced apartments which will take usually 18-24 months including planning and we are expecting that the impact of COVID will be finished by then. Office space in London usually yields about 4-5% where as serviced apartments is about 7-8%.
    This in our opinion and also many major financial institutions is the best use of office space in the coming years as the trend is developing towards working from home and the hospitality industry will bounce back in a years time.


    Gina Miele

    The company I work for is a laboratory with a an aggressive growth plan through acquisitions. The original laboratory site is currently our corporate headquarters, but we were deep into lease negotiations for corporate office space when COVID-19 hit (we had quickly outgrown our office space at the lab). At this time, everyone that was not required for laboratory operations was ordered to work from home. COVID has created a paradigm shift in our corporate culture. Pre-COVID, no one was allowed to work from home for fear of jealousy among staff members required for lab operations. Now, there is no plan to finish lease signing on the corporate office. If we do eventually move in that direction, the office that is leased will be significantly smaller in size, as many people that were asked to work remotely at the beginning of COVID will stay remote in the future.

    Had we leased the office space prior to COVID, this would have most likely slowed our growth plan, as it would have negatively influenced our bottom line without good justification/usage of space.

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