The latest London Office Crane Survey from Deloitte has identified a 20-year high in the number of schemes starting.
The survey, which covers the six months to 31 March found that 51 new schemes have started since the last survey – the highest in the 20-year history of the research.
Results show that the total volume of office construction has increased by 28% over the past six months to 14.2 million sq ft, the highest level since the first quarter of 2008. Some 38% of the space currently under construction is scheduled to complete over the next 12 months. This is partly the result of an increase in refurbishment projects, which account for just under half of the volume of new starts, and are typically quicker to complete than new-build.
The low level of available space in the market is reflected in the fact that 42% of the space under construction has already been let to a tenant. The current low level of available space across central London is partly due to developers postponing schemes following the 2008/09 recession, said Deloitte. “Our research shows that roughly 15 million sq ft of office space was completed during 2011-15, only around two thirds of the volume delivered in the previous five years, and half the delivery seen from 2001-2005.”
In just 18 months activity has nearly doubled, from 7.7 million sq ft in 2014. Only two surveys over the past 10 years recorded more than 14 million sq ft of space under construction.
Collectively, the 51 new starts will provide an additional 4.8 million sq ft of space, an increase of 58% on the volume of new starts recorded just six months ago. “While our previous reports had already pointed to a new wave of construction, the current activity does not include some large schemes that we have been tracking, but which had not officially begun at our survey cut-off date,” said Deloitte. “Had these developments been included, the record result would have been even higher.”
In the City of London, 26 new schemes have started, with a combined total of 2.9 million sq ft. This is the largest amount of new construction activity recorded in this submarket, even higher than in 2011, when three tower schemes got under way.
Elsewhere across central London, both the Southbank and King’s Cross submarkets recorded two new starts, each, adding a total of 264,000 sq ft. The West End has seen 12 new starts, but the combined volume of new space in these schemes amounts to just 426,500 sq ft, highlighting the smaller size of developments generally undertaken in that submarket.