London has witnessed the highest volume of new office starts on record, according to a major accounting firm.
5.1 million sq ft of new construction across 43 schemes has been recorded as part of Deloitte’s Winter 2023 London Office Crane Survey, nearly 16 per cent higher than the previously recorded figure.
It covers construction activity across The City, the West End, Midtown, Southbank, the Docklands, Kings Cross and Paddington.
In particular, the Southbank saw an increase of 19 per cent this survey period, largely driven by a large refurbishment job.
And, as of 30 September, 124 schemes were under construction in central London, with a total volume of 15.7 million sq ft, a nine per cent increase on the last survey (14.4 million sq ft).
Deloitte said the construction industry is “catching up” on activity following the pandemic.
Refurbishment starts have also broken records for the second consecutive survey, due to energy efficiency and sustainability commitments (Minimum Energy Efficiency Standard Regulations).
“New builds have roared back from their post-pandemic nadir, which has likely been driven by large pre-lets and growing developer confidence in the demand for premium office space,” said Sophie Allan, director in real assets advisory at Deloitte. “Meanwhile, refurbishments continue to play a critical role in London’s development pipeline as the increasing need to modernise office space to avoid obsolescence grows.”
Also, around 4 million sq ft of office space across 45 schemes in central London was fully delivered by the construction industry, the survey found, with 61 schemes (6 million sq ft) expected to complete by the summer 2024 survey.
Deloitte added that although demand for premium office space is high, supply chain issues and other construction delays could impact completion dates.
“Interestingly, developers we have spoken to seem to be more concerned about the supply of, rather than demand for, premium space,” said Margaret Doyle, partner and chief insights officer for financial services and real estate at Deloitte. “With the increased volume of new starts and completions reported this year, there is a healthy amount of prime office stock on its way to the market.”
Developers also highlighted the cost of construction as the biggest challenge in achieving net zero.
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