London Office Space Completions Hit 13-Year High

Nearly four million sq ft of new office space has been delivered over the last six months in London, according to new research.

The latest Deloitte London Office Crane Survey has recorded the largest volume of office space delivered in the city since 2004. However, 28 construction starts have been reported over the previous six months, compared to 40 in the previous survey.

Despite a 13% rise in the development pipeline volume, the total office space currently under construction across the capital is 13.9 million sq ft, a 6% drop compared to previous figures (14.8 million sq ft).

New-builds account for the largest share of new space (2.6 million sq ft) compared to refurbishment projects, increasing the average size up from 70,000 sq ft to 113,000 sq ft. In addition, 43% of space currently under construction is already let.


Regionally, the City currently has 10 new schemes totalling 1.9 million sq ft under construction, boosting its pipeline to 8.2 million sq ft. The largest fall was recorded in the West End, down 27% in six months.

Shaun Dawson, author of the London Office Crane Survey at Deloitte, said: "The sheer volume of completed space is no surprise given the surge in development activity 18 months ago. In total 4.4 million sq ft completed in 2016 and this momentum has continued into 2017, we expect this year's annual total delivery to be the highest since 2003.

"Good quality new stock is attracting significant tenant demand with 10 of the new schemes starting construction already achieving leasing success and of the 3.9 million sq ft of completed space, half was pre-let. This early leasing activity has softened the impact the volume of space completing has on the market."

Nigel Shilton, managing partner at Deloitte Real Estate, added: "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. Demolition levels remain high at 7.9 million sq ft, which chimes with the sentiment of our surveyed contractors who expect a rise in workload over the coming 12 months. Looking at the development pipeline, we forecast around 39 million sq ft to be delivered by 2021. Very few schemes have been cancelled, highlighting continuing developer confidence."

(LM/MH)