If we had a pound for every time ‘flight to quality’ had been mentioned in the last 12 months we’d be millionaires. However, the sentiment is completely correct for occupiers beginning their return-to-work strategies.

The figures speak for themselves. A quarter of the current 8 million sq ft of active requirements in the London market is for occupiers with lease events of 2025 and beyond, meaning they are only considering pre-let stock which is, of course, all Grade A. Eighty per cent of 2020 take-up and over 90 per cent of space acquired so far in 2021 across Central London is Grade A. The two tier market is clear to see.

But does that mean there is no place for Grade B space, or is there a new opportunity for it? Does our archaic classification of pigeonholing into Grade A or B do the more ‘characterful’ space justice? Surely now what might be called a Grade B building by specification is actually sought after by certain business sectors?

Firstly the context: we have seen the quantity of Grade B space available on the market increase by over 284 per cent over the past five years, from 1.3 million sq ft to 5.1 million sq ft (57 per cent of this is on 10,000 sq ft or less floor plates).

The simplest answer is to spend money and make these spaces into what we traditionally call Grade A offices. However, with the return to work focussing around wellbeing and the ESG agenda it is no longer a technical specification-driven exercise, but how the space feels and functions that will be the key to Grade B space retaining a place in the market.

Natural light, volume, collaborative spaces, operable windows and communal terraces are some of the most important parts of an office building post-pandemic. These may not necessarily be too expensive to create in existing Grade B buildings. Certainly, new M&E and lifts are expensive, but with a creative approach we believe that many Grade B spaces can be reclassified as much more ‘relevant’ spaces than the traditional Grade A or B labels.

There are other ways too of rising above the Grade A/B classification. The new Class E planning use provides landlords with the opportunity to add different uses into a building, thereby creating more of a community which occupiers crave for their culture and staff retention.

Flexibility in a landlord’s approach will attract occupiers. Flexible leases that are tailored to the occupier’s specific needs in terms of length, incentives and expansion/contraction rights as well as the condition the space is taken in come together to make spaces potentially more attractive than a traditional Grade A building.

Further information

Contact Victoria Bajela or Hunter Booth

Contact Savills Flexible Workspace