The volume of central London office construction has risen by more than a quarter (28%) in just six months. Deloitte Real Estate’s London Office Crane Survey, now running for 20 years, has recorded 51 new construction starts, the highest number in the survey’s history. This brings the total amount of office space under construction to 14.2 million sq ft.
Chris Lewis, head of occupier advisory at Deloitte Real Estate, said: “London is building for business as developers respond to strong occupier demand. In just 18 months we have seen construction activity nearly double from 7.7 million sq ft in late 2014 to over 14 million sq ft today. As these new schemes begin to complete, London’s diverse mix of office tenants can look forward to a greater level of choice.”
The City of London has the lion’s share of new construction starts (26) taking the City’s development pipeline to 8.2 million sq ft. However, in relative terms the Midtown market boasts the greatest jump in development activity, up by 58% in just six months. The nine new office schemes will collectively provide 1.2 million sq ft of space and represent the highest volume and number of new starts ever recorded for the Midtown market in a crane survey. Elsewhere across central London, both Southbank and King’s Cross recorded two new starts each, and the West End has seen 12 new starts.
Lewis continues: “This survey highlights the balance between supply and demand. With five years of previously low construction levels limiting businesses’ choice of space, pre-completion lettings are on the rise. Nearly six million sq ft, or 42%, of space currently under construction is already let, that’s up from 38% in six months. This is largely driven by the financial and technology, media and telecoms sectors, which have signed for 2.3 million sq ft and 2.2 million sq ft of space respectively.
“Two decades is an incredibly long time in this fast evolving office market, so what can we learn? Rapid advances in technology, combined with a new generation entering the workforce, and changing business structures mean that the way in which offices are used will continue to change. Businesses will increasingly seek providers who can offer real estate as a service.”
Will Matthews, head of research at Deloitte Real estate, says: “Over the past 20 years our crane surveys have tracked the development of more than 76 million sq ft of office space, and charted the rise of new office locations across central London, such as Canary Wharf and King’s Cross. This survey reveals an unprecedented number of new schemes and, with many more sites under demolition, we expect to see the pipeline rise further to almost 16 million sq ft by the end of this year.”