The industry is impacted by remote and hybrid work, according to investment bank Jefferies.
The share of empty office space in London's main business hubs has surged to a record high in recent times, causing the UK capital to be transformed into a'rental recession', investment bank Jefferies said.
The bank's analysts forecast that there has been a significant reduction in the city's office usage due to a hybrid work model and a shift to greener offices in the suburbs.
Flexible, co-working and serviced offices account for about 9% of London's space and have moved into some of the vacant sites, according to the report.
'' The first casualty and we think offices are next,'' he said. Utilization has shrunk and landlords are losing pricing power as tenants offload surplus space, analysts said.
In its report, Jeffries downgraded commercial real estate firms British Land Company and Great Portland Estates and warned that the market will continue to shrink.
The future of London has been a major concern for top financial managers, warning that the UK capital could lose its status as a top financial hub. Lloyds Bank said that 64% of the sector leaders believe the city will stagnate as a global hub compared to its rivals.