London Office Construction at ‘highest level since referendum’
The construction of new offices in central London has reached the highest level in three years, according to Deloitte’s latest London Office Crane Survey. The poll recorded 37 new office developments in the past six months alone, adding 3.5m sq ft to the development pipeline, up 12% from the previous survey in November last year.
This additional development has brought the total office space under construction in London to 13.2m sq ft, exceeding the long-term construction average of 10.6m sq ft. The City of London is still the front-runner for office developments, with 33 schemes ongoing covering 6.7m sq ft. This makes up over half of the overall office developments in the capital.
Deloitte attributed the increase in office developments in London to “sizeable commitments” from global IT firms, particularly in the City of London, King's Cross and the West End. However, the report said developers are still facing challenges with rising construction costs.
There was a shift in the City of London towards sustainability through large-scale refurbishment works rather than new-builds, accounting for eight of the 33 ongoing schemes there.
King's Cross developments contributed to a quarter of the overall growth in office developments in the capital, with four new-builds representing a 26% share of all new office schemes. The West End also saw a 10% increase in office development compared with the last survey, with 27 schemes under construction, amounting to 1.9m sq ft.
Deloitte real estate director Mike Cracknell said:
“London’s office market remains resilient in the face of uncertainty as we witness an encouraging increase in new construction starts. This is testament to developers’ continued confidence in London’s office leasing market long-term.”
International trade secretary Liam Fox said the findings are
“a far cry from the doom and gloom predicted when the UK voted to leave the European Union in 2016”. He added that it “reinforces the City’s global pre-eminence as an investment destination”.
The crane survey is calculated by field research on developments over 10,000 sq ft in London, which is then verified with direct industry links and in-house property experts. Findings cover the seven major submarkets of London; the City of London, the West End, Docklands, King's Cross, midtown, Paddington and South Bank. It also considers three emerging submarkets in Vauxhall/Nine Elms/Battersea, White City and Stratford.
Source: Construction News