Central London office space developments totalling 3.9m sq ft completed in the six months to the end of March – believed to be the highest half-yearly total to be delivered in the last 13 years.
New development activity continues to grow in addition to current developments. Projects totalling 3.2m sq ft started on site, an increase of 13% compared to the previous survey, enhanced by the addition of 22 Bishopsgate, which will deliver 1.275m sq ft of office space.
The new starts have kept the volume of London office space under construction at elevated levels despite the high level of completions. London’s development pipeline declined by just 6% on the previous survey to 13.9m sq ft.
“The decrease in overall volume of space under construction could suggest that developers have slowed down yet this is more a result of timing and two years of elevated levels of construction completing rather than developers holding off,” said Nigel Shilton, managing partner at Deloitte Real Estate, despite the falls.
“Very few schemes have been cancelled, highlighting continuing developer confidence.”
The City of London continues to dominate development activity, with 10 new schemes recorded in the area alone from September 2016 to March 2017. This brings the City’s construction pipeline at 8.2m sq ft. This represents a 7% decrease year on year, but is compensated by of a number of large schemes having completed in the past six months.
According to Deloitte Real Estate’s study, the largest decrease in construction activity was recorded in the West End, which is down 27% in six months, despite promising Q1 investments. Midtown and Southbank’s development activity increased by 9% and 6% respectively.
Looking ahead, Shaun Dawson, author of the London Office Crane Survey at Deloitte, forecast that the volume of new space to complete would remain high, “We expect this year’s annual total delivery to be the highest since 2003,” he said.
Although completion has soared and new development isn’t showing signs of slowing down, availability is not expected to surge as a result because much of the space has already been let. Some 43% (6m sq ft) of space currently under construction is pre-let.