Why HSBC’s London relocation demonstrates the potential of flexible businesses
For some, HSBC’s relocation is the beginning of an exodus of business from Canary Wharf that marks both its decline, as well as a decline in support for office spaces generally.[1] However, this conclusion is far too limiting – businesses are certainly facing a transformation, but it is one that indicates a real faith in the value of fit-for-purpose offices in London’s economy, especially as we continue to adapt to evolving ways of working and doing business.
There is no decline in the need for office spaces in London – after all, most commentators have agreed that the demand for office space is currently 10% above the usual 10-year average.[2] So why is HSBC moving away from its home office at all? Ultimately, the move reflects a change in the type of office desired – modern, flexible offices that offer amenities beyond the standard open-plan floor are taking over.
Businesses and their employees alike desire more from the workspace. As Andrew Mawson, managing director of AWA said, HSBC’s move is demonstrative of a shift in managerial priorities – it is a recognition that smaller, flexible offices are more convenient for employees, while also meeting important sustainability targets.[3] Mawson sees this move as a necessary transformation in which “enlightened” workforces embrace hybrid working, while outdated ones stubbornly defend the old ways of working.[4]
There is clearly a shift in mentality. Flexible offices have become increasingly popular – and London makes up 75% of the available flex office space across the U.K.[5] But why exactly is the flexible office so compelling, and how does that translate to better opportunities for both businesses and the property market?
The example of the hour is St Pauls, and there is no surprise as to why the area has garnered commercial interest. Along with HSBC, ‘magic circle' firms such as Clifford Chance are also planning to move to the area in 2028, clearly demonstrating the rising commercial popularity of the area.[6] Office Space in Town (OSiT), has been established in the area since 2013 and our experience with serviced and flexible office spaces both pre-and-post the global pandemic has afforded us the understanding of how both employee and client priorities will increasingly reshape businesses to favour areas such as St Paul’s over more traditional economic centres.
Part of the growing appeal of locations like St Pauls and various other hubs across the City is the type of office spaces that are on offer, along with the out-of-office amenities that are available. With workers increasingly able to choose how they work, the desire for more befitting amenities has increased – the standard office cubicle lack resonance, and St Paul’s, for example, offers a more engaging location – the cathedral is culturally iconic, and the area is filled with various restaurants, pubs, and gyms. Moreover, the central location guarantees easy public transport options for commuters. Those used to hybrid working now crave and require access to the things they enjoy outside of work, so much so that it is shaping not only their priorities but also their employers in terms of how and where they work.
The requirement for properties and spaces that can cater to this shift will only continue to increase across London, especially so in areas where there is an existing availability of out-of-office activities and amenities.
HSBC moving to the St Paul’s area may well inspire further departures from places like Canary Wharf, but this is not necessarily a bad thing. The desire for office space is not declining, but the discussion around it has undoubtedly shifted. The experience of the pandemic has made workers more discerning about the office environment, and the best way to tempt people back is to embrace their changed mentalities and make the office experience something workers can be invested in. HSBC is not and will not be the only business to recognise the importance of this development.
Large businesses moving away from their traditional homes in favour of new locations such as the Square Mile should be treated as an exciting opportunity. The rise of flexible and serviced offices promises huge potential for both London and the UK’s commercial property market moving forward.
[1] https://www.ft.com/content/a54a00b3-cb5b-44d6-a36c-68253d72d7d0
[4] Ibid.
[6] https://www.whatjobs.com/news/hsbcs-move-to-former-bt-site-shows-changing-demand-for-office-space