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Office starts in London at highest recorded level with 51 new schemes under way

Office starts in London hit a 20-year high and commercial activity grew by 28 per cent in the six months to March, according to Deloitte’s London Crane Survey for summer 2016.

The survey shows there have been 51 new construction starts in the six months to the end of March 2016, the highest number in its 20-year history.

The total amount of office space under construction in the capital is now 14.2m sq ft.

The new figure far outstrips the previous high of 31 new schemes, recorded in 2007, and is more than double the 10-year average of 19 office starts. It is also more than 10 times the low point of four office starts recorded in 2010.

The 14.2m sq ft under construction is the largest since the Q1 2008 survey but is still below the high of 19.5m sq ft reported in 2002.

The bulk of new office starts (26) are in the City, taking the square mile’s development pipeline to 8.2m sq ft. Nine new schemes started in Midtown, which also posted the largest growth in development activity of any London region – a 58 per cent increase compared with the six months to October 2015.

Elsewhere, the West End saw 12 new office starts while Southbank and King’s Cross recorded two apiece.

Developer Brookfield has the largest amount of office space under construction across the capital, followed by Land Securities and Canary Wharf Group. In total, property companies account for 38 per cent of the space under construction, down from 49 per cent in the six months to October 2015.

Nearly six million sq ft of the space currently under construction in London is already let – 42 per cent of the total, up from 38 per cent in the previous survey.

Commenting on the survey, Deloitte Real Estate head of occupier advisory Chris Lewis said much of this uptake was from the financial sector, which accounted for 2.3m sq ft of space.

He added that businesses will “increasingly seek providers who can offer real estate as a service.”

“Rapid advances in technology, combined with a new generation entering the workforce and changing business structures, mean the way in which offices are used will continue to change,” he said.

Earlier this week, contractors reported their 12th straight quarter of activity growth, but data from earlier in May from the Markit/CIPS construction PMI suggested output had hit a three-year low in April.

 

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