Image: Dreamstime/Jose Alberto Barci Figari
The construction of new offices in London has hit a three-year high despite ongoing uncertainty around Brexit, according to Deloitte Real Estate’s latest London Office Crane Survey.
The biannual survey found that total office space under construction in the capital is 13.2m sq ft — a 12% increase on the previous survey.
A total of 37 new schemes broke ground in the past six months, adding 3.5m sq ft into the development pipeline.
King’s Cross boasted four new starts representing a 26% share of all new starts. Meanwhile the City of London continues to dominate construction activity with 6.7m sq ft across 33 schemes. This is over half (51%) of the total volume across the capital. The City has also seen a shift in favour of large-scale refurbishments versus new builds, as developers began work on eight refurbishments, according to Deloitte.
Office development in the West End is up 10% on the previous survey and currently has 1.9m sq ft under construction across 27 schemes. Midtown and King’s Cross also experiencing a rise in construction levels, increasing their square footage under construction by 7% and 65% respectively.
Mike Cracknell, director at Deloitte Real Estate, 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.”
“Quite simply developers would not start construction if the demand for leasing offices was not there, or expected to be there, especially in the submarkets outside of the City, West End and Midtown. Over half (55%) of the office space under construction is already let and for larger schemes over three quarters (78%) is already committed to. Notably occupiers in the financial services sector have pre-let 2.1m sq ft of space that is still under construction. This is a 50% increase in six months and suggests there is confidence the sector remains committed to London.”
