The number of central London offices under construction has risen by more than a quarter in the past six months.
Deloitte Real Estate’s London Office Crane Survey recorded 51 new construction starts, the highest number in the survey’s history and up 28% on the previous six months. This brings the total amount of office space under construction to 14.2m sq ft.
The City of London has the lion’s share of new construction starts, with 26, taking the City’s development pipeline to 8.2m sq ft. However, in relative terms the Midtown market boasts the greatest jump in development activity, up by 58% in just six months. The nine new office schemes will collectively provide 1.2m sq ft of space and represent the highest volume and number of new starts ever recorded for the Midtown market in a crane survey.
“London is building for business as developers respond to strong occupier demand,” Chris Lewis, head of occupier advisory at Deloitte Real Estate, said. “In just 18 months we have seen construction activity nearly double from 7.7m sq ft in late 2014 to over 14m sq ft today. As these new schemes begin to complete, London’s diverse mix of office tenants can look forward to a greater level of choice.”
Elsewhere across central London, both Southbank and King’s Cross recorded two new starts each, and the West End has seen 12 new starts.
Lewis continued: “This survey highlights the balance between supply and demand. 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 42%, of space currently under construction is already let, that’s up from 38% 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.”
Will Matthews, head of research at Deloitte Real estate, added: “This survey reveals an unprecedented number of new schemes and, with many more sites under demolition, we expect to see the pipeline rise further to almost 16m sq ft by the end of this year.”