London office construction slips down a gear

Aaron Morby 7 years ago
Share

The number of office project starts in central London has dropped to a three-year low as developers continue to delay schemes to take stock of Brexit and rising costs.

New figures from the London Office Crane Survey by Deloitte Real Estate show just 25 projects were started between April and September this year.

This figure is around half that recorded during last year’s peak of 51 and equates to just 1.8m sq ft being added to the development pipeline, which is 21% below the average for six months.

The fall has been concentrated in the City, while the West End has actually witnessed a significant up-tick in start-up activity.

Shaun Dawson, head of insight at Deloitte Real Estate, said: “We have seen slowdown in development activity with two crane surveys recording a fall, but total volumes still remain high compared to our long-term average, continuing to stay above 10m sq ft since 2015.

“It is this reduced volume of new space starting that could indicate a slowdown and suggests a cautionary approach by developers over the past year.”

Early trades such as demolition and substructure contractors are showing on average no growth and a small drop in workload expectation respectively, also suggesting the industry is moving into a slower gear.

Tender forecast

Deloitte presently anticipates that price increases for Greater London will stabilise in 2018 to around 1‑2%.
Against general consensus of subdued specialist price inflation, brickwork and roofing contractors anticipate average increases of 10% and 7% respectively, driven by a spurt in residential developments rather than office projects.

Overall construction activity in the capital has dropped 9% to 12.6m sq ft since the previous survey six months ago. This is also down to a wave of projects now coming to completion as 2017 shapes up to see the highest volume of office space opened for 13 years.

Around half of the pipeline under construction is already pre-let.

In the City development activity is down 11% with 7.3m sq ft under construction. Only eight new schemes started during the period. This represents 804,000 sq ft, significantly lower than the 1.1m sq ft average.

In the West End 14 new schemes totalling 657,500 sq ft started construction, the greatest number of new starts recorded in a single crane survey for this submarket.

Alongside existing activity, there is now 1.4m sq ft being built across the West End – a 20% increase since the last survey.

Refurbishment schemes continue to dominate the new starts with 16 offices accounting for 70% of the volume.  Generally smaller in scale than new-builds, the average size of project has dropped from its long-term average of around 97,000 sq ft to 73,000 sq ft.

 

Latest news

Breakthrough for HS2 as first Birmingham tunnel section dug

Balfour Beatty VINCI completes 3.5km TBM drive in 652 days drive
2 days ago

HS2 Curzon Street station redesign approved as timber roof axed

Change to meet stricter fire safety rules and cut maintenance costs
2 days ago

Care home fire trial collapses

Prosecution withdrawn against four firms including Morgan Sindall Property Services
3 days ago

Leicester rebids £22m station revamp after failed tender race

Council opts for ECI route after receiving one bid for project
2 days ago

Kier wins East Coast College rebuild job in Great Yarmouth

Work to start this summer for 1,300-student college
3 days ago

R G Carter wins £28m hospital car park job in King’s Lynn

MSCP paves way for £1.5bn Queen Elizabeth Hospital rebuild in 2027
3 days ago

London to relax green belt building rules

Sadiq Khan shifts position on planning
3 days ago

Willmott Dixon wins Great Yarmouth waterfront deal

North Quay 10.5 acres mixed-use scheme to advance
3 days ago

SIG chief quits to join Travis Perkins

Gavin Slark to leave by the end of this year
3 days ago

Eight take key spots on £250m Prosper framework

Housing and public building upkeep deal for North East awarded
3 days ago

Early call-out for £150m Ebbsfleet Garden City infrastructure

Bidders day to set out plan for Ebbsfleet Central commercial scheme
5 days ago

McLaren storms April contracts league with flurry of wins

Cardiff Bay Arena job headlines a series of big contract wins
4 days ago

Balfour Beatty lifts cash forecast after strong first quarter

Contractor set to hit £1bn average monthly net cash in 2025
4 days ago

Goldman Sachs-owned Adler & Allan buys 180-strong civils outfit

West Country's Glanville Environmental gets new owner
4 days ago

Caddick lands first contract for £200m Skelmersdale revamp

Developer gets green light for masterplan
4 days ago

Van Elle sells HGV fleet to haulage firm

WS Specialist Logistics pays £2.9m to take on fleet and drivers
4 days ago

Buyers more bullish about prospects for year ahead

Residential "resilient" but commercial work a weak spot
4 days ago

Council backs first Brutalist car park-to-flats scheme

Newcastle-under-Lyme multi-storey car park to be reborn as pioneering homes scheme
5 days ago

Hinkley Point C hits peak build with 26,000 jobs

3,000 more workers to join as fit-out work ramps up
4 days ago

Over 40 firms win Wessex Water M&E minor works deal

Broad sweep of specialists picked for AMP8 programme
5 days ago

Spencer lands Scottish bridge hat-trick

Steelwork, gantries and bearing upgrades on Kessock, Forth and Tay crossings
5 days ago

Winners revealed for £1.5bn decarbonisation deal

Fusion21 confirms places for 40 firms: Full list
5 days ago

Cladding firm fined £225,000 after fatal fall

Court hears how cherry picker didn't reach all parts of repair job
5 days ago

Completed buildings caught-up in Gateway 2 chaos

Developer distraught after dealing with Building Safety Regulator
6 days ago

Aviva submits plans for 34-storey City office tower

Subject to planning work to start in autumn 2027
6 days ago

Murphy takes 40% stake in Aussie civils contractor

Firm enters Australasian market with stake in Sydney-based contractor Abergeldie
6 days ago

Moat seeks firm for £420m repairs and maintenance deal

15-year deal to upkeep 20,000 south east homes
6 days ago

Lynch takes over hotel for Sizewell plant operators

Hire giant now in the hotel business to guarantee accommodation for workers
6 days ago

Subcontractors wanted across Scotland

Latest Constructionline event in Glasgow: Register now
6 days ago

Six guilty of £2m bribery over Devon housing site deals

Corrupt building bosses and E.ON project chief and QS sentenced
1 week ago

Contractor services