John Lewis writes off £15m of its head office as hybrid working becomes more popular

The partnership that owns John Lewis and Waitrose wrote down the value its head office by £15.6million, the latest indication of the impact the work-from home revolution and rising interest rates have on commercial property values.

According to the new filings of the annual accounts, the writedown was a result of the retailer closing seven floors in its central London headquarters, and “revising” the use its office buildings in Bracknell in Berkshire.

John Lewis Partnership has 74.300 employees. Last month, it announced that it would be terminating the lease of its London head office early because it had less space to fill after allowing the staff to work at home since the pandemic. The partnership said it had 220,000 square feet of space in Victoria but only needed 100,000, according to the statement.

After implementing its “blended-working” policy, the employee-owned group has also reduced the number of office spaces at its Bracknell location. The partnership confirmed it retained the gym and sportshall at Bracknell.

Commercial real estate has been affected by the low office space utilization rates following the pandemic, high inflation and rising rates. According to Office for National Statistics’ blue book data, the value of Britain’s commercial real estate at the end 2020 was £899 billion. Schroders Research estimates that the value has fallen by 21%, or £210 Billion, since last June. It would be three times as much as the £71 billion that fell between the end 2008 and the ending 2010 in the UK.

Jonathan de Mello is the founder and CEO of JDM Retail. A retail and property consultancy firm. He said that hybrid working will be here for a long time. This, combined with extremely high interest rates, has had a significant impact on the demand for new offices. This is not good news for developers who have new office space in construction. Some. . . Even if the mothballed items are removed, there is still a large amount of money left. . . “Even with the low or concessionary rents, some of these new spaces will probably remain vacant for a while.”