London Office Construction on the Rise
Posted on: 19/05/2015

The most recent London Office Crane Survey by Deloitte Real Estate has shown that office construction within London has expanded by more than 24% over the past six months.

Within this period the survey recorded a total of 31 new office construction projects starting, contributing 4.4 million sq ft into the total 9.5 million sq ft currently in development within the City.

Anthony Duggan, head of real estate strategy at Deloitte has suggested that this increase reflects “the start of the supply response the market has been expecting”, following the period of decline in the wake of major projects such as the Walkie Talkie and Cheesegrater.

He continued however, “this increase in activity will not come in time to alter the very tight supply dynamics the office market is currently experience. We expect further rises in rents and more pre-let deals on schemes under construction as tenants compete for the limited amount of available space.

“Looking further ahead, we expect the development pipeline to continue to increase as developer confidence translates to more active construction sites across London.”

This is positive news for the construction industry within London, with many firms struggling to gain big contracts during the decline of office builds.

Steve Johns, head of City leasing at Deloitte Real Estate, said: “Developer sentiment is continuing to improve and this is good news for London’s diverse occupier base.

“The increase in new starts is the second highest we’ve recorded in 20 years. Nevertheless, a third of this space has already found tenants, leaving 22 of the new starts as speculative development schemes.

“There is no need to sound the alarm bells just yet as the 9.5m sq ft development pipeline is only slightly above the average level of activity recorded in the past 10 years. Of this, 37% is already let.”

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