Deloitte has slashed its London office space sharply in one of the biggest real estate cuts by a British professional services firm since the pandemic triggered a shift to hybrid working.
Accountancy and consultancy firm Big Four will vacate a building on its New Street Square campus next month, bringing the amount of office space it has given up in the UK capital to almost 250,000 square feet. course of the past year.
The company’s exit from the 185,000-square-foot building, Hill House, follows its decision last year not to reopen another of its four New Street Square offices following pandemic closures. It also closed its two-story digital hub near Clerkenwell last summer.
No jobs were lost as part of the changes and staff working in the closed buildings were moved to Deloitte’s remaining offices in London, a person briefed on the matter said.
Worry about the future of offices and city centers has weighed on developers, landlords and their investors since the start of the pandemic, with long periods of forced work from home and shifts to working models hybrids threatening commercial real estate. The industry is also facing higher costs to comply with environmental regulations and the rise of flexible workgroups like WeWork.
The long-term damage to developers is still unclear, as the return to work has been disrupted by the Omicron wave in the UK. Offices in February were still on average less than 25 per cent full, compared to pre-pandemic average levels of between 55 and 60 per cent, the FT reported.
Deloitte has reduced its UK office portfolio more drastically than its main competitors. It decided in 2020 to close offices in Gatwick, Liverpool, Nottingham and Southampton during the pandemic, offering all 500 staff the option of keeping their jobs if they worked from home full-time.
A recent internal survey revealed that the majority of its staff did not want to come into the office more than two days a week. Last year, the company asked employees to decide for themselves how often they work from home.
“We are constantly reviewing our office space requirements to reflect changes to our ways of working and our sustainability goals,” said Stephen Griggs, UK Managing Partner of Deloitte, adding that the firm would continue to invest in its offices across the UK.
Deloitte has extended the leases for the two largest buildings on its New Street Square campus until 2036, leaving it with 485,000 square feet on the Landsec-owned site where it has been based since 2007.
The UK’s fifth and sixth largest accountants, BDO and Grant Thornton, have also closed secondary offices in London that were no longer needed due to the shift to hybrid working.
BDO did not renew the lease of its 470-person site on Aldersgate Street as staff were forced to work remotely during lockdowns in 2020. Employees based in the City of London building moved to the headquarters of the business in Baker Street.
Grant Thornton sublet two floors at 110 Bishopsgate, which he said had “proven to be surplus to our needs since the pandemic”. “We have no intention of subletting any other property,” he added.
Their biggest rival, KPMG, decided last year to close its technology center in Manchester and move staff to its main office in the city because it no longer needed so much space.
Despite the rise of remote work, some professional services firms are only slightly reducing their office portfolio or maintaining a similar amount of space as their workforce size increases.
“New modes of transportation are currently offsetting the need for more square footage even as the business continues to grow,” said Paul Eagland, managing partner at BDO.
PwC, another major accounting firm, said “any potential reduction in demand for space through hybrid working will be offset by an increase in overall headcount.”