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Land Securities predicts London office space shift as returns to profit

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By Aby Jose Koilparambil

(Reuters) - Land Securities, whose $15 billion property portfolio is largely made up of central London offices, expects growing demand for more spacious spaces that allow for greater physical distancing to boost rental prices.

Britain's top commercial property landlord said on Tuesday it was seeing higher demand for work spaces with more room, often for multiple floors within a building, as it reported a return to profit for the half-year thanks to rent levels in London recovering from their COVID-19 pandemic lows.

Landlords face a bumpy road to recovery as many workers have not returned to offices from home working, but the lower footfall need not affect the amount of space that tenants commit to, Chief Executive Mark Allan told reporters on a call.

"(Tenants) are really interested in having access to more flexible space on top of their core letting to enable them to expand and scale back depending on whether they have got a particular project ongoing, or the conference space or meeting space," Allan said.

Large tenants were also showing interest in occupying multiple floors within a single property, Allan added.

FTSE 100-listed Land Securities, which is itself based in London, said it expected demand to remain "resilient" for the rest of the year.

EPRA (European Public Real Estate Association) net tangible assets, a measure of the value of its buildings, had risen 2.7% to 1,012 pence per share in the half-year to September, the company added in a statement.

Shares in Land Securities were up 5% to 745.8 pence at 1125 GMT, having hit a more than six-month high.

Land Securities, which had announced a four-pronged growth strategy last year including diversification into mixed-use properties, said profit before tax was 275 million pounds ($370 million) in the six months ended Sept. 30, compared with a loss of 835 million pounds a year earlier.

($1 = 0.7427 pounds)

(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Uttaresh.V, Sachin Ravikumar and Alexander Smith)

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