London office construction increases by 18%

Construction in London has now returned to the peak levels of 2009, according to new data.

shutterstock_290051951
ChameleonsEye / Shutterstock.com

According to the latest Deloitte London Office Crane Survey, office construction in the capital is up by 18% over the past six months to 11.1 million square feet.

There have been 26 new starts on office schemes, adding three million square feet to the pipeline, additionally there has been a 21% rise in let space under construction.

Although volume of new space completed in 2015 is expected to be down on 2014 and 2013 (just 3.3 million sq ft will complete in 2015), the rise in demolition levels (to 6.4 million square feet) indicates more construction work is imminent.

Available office space continues to be in short term supply and completions in 2015 have done little to alleviate this.

Much of the activity is attributed to the Crossrail project generating office developments.

The rise in demolition levels to 6.4 million sq ft has indicated that more construction is imminent, with over of the space under construction scheduled to be completed over the next 15 months.

In the past few surveys published by Deloitte, it has been reporting the level of demolition activity taking place. This has been a good indicator of future construction starts, and in the latest survey it is showing a 25% increase, taking the total volume of space being prepared for construction to over 6 million sq ft.

These findings are also supported by recent data on construction contracts from the Office of National Statistics. This shows that the volume of contracts awarded for new commercial construction in London has been increasing since 2014, with early indications showing that this rise continued through into Q3 2015.

There is a relatively strong correlation between this data and the data published by Deloitte regarding new construction starts.

The past six months have seen a further increase in construction, with activity rivalling levels last seen in 2009. Forecasts suggest that the coming year could see construction activity rise still further, with both 2018 and 2019 now potentially delivering significant volumes of space.

Nevertheless, with the amount of space currently under construction and due for completion in these years still low, there could be a first-mover advantage to be shared amongst developers that are able to commence projects imminently.

References:

Deloitte

The Construction Index

 

Leave a Reply

Your email address will not be published. Required fields are marked *