A total of 6.4 million sq ft is now under construction compared to an all time low of just 2.7 million sq ft six months ago.
Anthony Duggan, Head of Research at Drivers Jonas Deloitte, said: "This survey records a dramatic positive change in construction activity as anticipated in our last report. The race is on to deliver schemes to take advantage of the dwindling supply of Grade A space in 2012 and 2013."
The confidence that developers are showing in the market is evidenced by the size of the schemes being built. Just under half of the schemes under construction are 100,000 sq ft or bigger. This includes a number of schemes that are large by traditional West End standards and even by City standards.
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Mr Duggan continued: "Large buildings in the West End, such as British Land's Regents Place and Legal & General & Mitsubishi's Central St. Giles have been star performers over the last year – developers have recognised this trend and are looking to cash in on this type of occupier demand."
However, despite increased construction levels, the amount under construction remains below average with just 120,000 sq ft being delivered in 2012 and nothing currently scheduled for 2013. This lack of new supply puts further pressure on the level of available space with rents expected to continue to rise as occupiers compete for the best stock.
Mr Duggan commented: "It's looking increasingly likely that 2012 will be the lowest year of completions on record with a window of opportunity still remaining to deliver into 2013 - but only if work starts immediately. We expect rents to continue to rise over the next two years as occupiers are forced to compete for the reducing supply of top quality space."
The survey also heralds a warning that the current supply picture is likely to change as Drivers Jonas Deloitte calculates that there could be a further 1.2 million sq ft delivered into 2013 from schemes with vacant possession and planning permission, and a further 2.8 million sq ft with permission that could be delivered into 2014 on top of the 2.3 million sq ft already being delivered into that year.
(CD/BMcC)
