London office leasing deals are hanging in the balance as ‘zombie occupiers’ rethink their space requirements in light of Covid-19.

Senior industry sources have warned that the number of ‘zombie occupiers’ – tenants with space surplus to requirement – has risen dramatically during the crisis.

“We’re aware of a number of deals that have been put on hold,” said Guy Grantham, director of research and forecasting at Colliers International.

“Some occupiers are in limbo at the moment. They’ve either got lease events – reviews or expiries – coming up, or that have just happened, and are holding over the space with the landlord’s consent.”

One example is performance booking platform Live Nation, which is deliberating whether to keep the 63,000 sq ft it took at the newly refurbished Farmiloe Building in Farringdon.

The business signed for the space in 2018, doubling its office footprint in the capital, but is now questioning the move given the hit the live music industry has taken during the pandemic.

Grantham said the market will not see the full impact of zombie occupiers on leasing activity “until October, when the government turns off all the packages they’ve put in place to help businesses – unless of course they extend them.

“At that point, we’ll find out how hard some of these sectors and individual companies have been hit. For now, a lot of them are being allowed to tread water while they decide whether they take up leases.”

One senior agent told Property Week that it was “very difficult” to know how big office requirements would be until people returned to the workplace.

“At the moment, there’s hardly anyone in an office so whether people are in work, furloughed or out of work, the fact is those office buildings are not really being used,” they said.