London office development hits 20-year high

Deloitte Real Estate’s London Office Crane Survey, which is released every six months, found that construction was up more than 28pc between October 2015 and March 2016 compared to the previous six months.

Of the 51 offices currently being built, 26 are in the City of London, more even than in 2011 when three tower schemes commenced. The total number of offices being built far surpasses the 10-year average of 19, and the previous high of 37 recorded in 2007, just before the global financial crisis.

The total amount of office space being developed is 14.2m sq ft – almost twice the 7.7m sq ft that was being built in late 2014, and the greatest amount of space since 2008.

Buildings currently under construction include a new headquarters for Facebook in the West End, a new office for the company owned by chef Jamie Oliver in King’s Cross, and Goldman Sachs’ new HQ in Farringdon.

Deloitte suggested that the increase in building activity was partly because developers had put their schemes on hold during the recession and were now beginning to build again as the economy improves.

The number was also boosted, it said, by the amount of refurbished space being developed alongside brand new buildings.

However, it said new construction starts were likely to slow if the UK’s EU referendum results in a vote to leave, because tenants would be, at least in the short term, more uncertain about their presence in London.

Currently, the referendum does not seem to be influencing construction activity, it said, and developers remain “sufficiently confident” to push ahead with new schemes. It estimated that the development pipeline would increase to almost 16m sq ft by the end of the year.

Chris Lewis, head of occupier advisory at Deloitte Real Estate, said: “With five years of previously low construction levels limiting businesses’ choice of space, pre-completion lettings are on the rise. Nearly 6m sq ft, or 42pc, of space currently under construction is already let, that’s up from 38pc in six months.

“This is largely driven by the financial and technology, media and telecoms sectors, which have signed for 2.3m sq ft and 2.2m sq ft of space respectively.”

First appeared at the Telegraph