City of London office market tilts towards refurb projects

Aaron Morby 10 years ago
Share

The number of office refurbishment projects is on the rise in the Capital as financial institutions move towards improving office space rather than into new buildings.

According to the latest Drivers Jonas Deloitte Crane Survey six out of the last nine major construction starts in the City were refurb projects.

Across London as a whole one in four big schemes are now refurb jobs bringing much-needed work to struggling fit-out specialists.

Since the Spring survey there have been 25 new starts across London, slightly down on the 34 recorded six months ago but maintaining at 9m sq ft the total office space now under construction in central London.

Anthony Duggan, partner and head of research at Drivers Jonas Deloitte, said: “At a market level The City has seen a further increase in construction while a number of development completions and a lower level of new starts have led to activity falling in the West End.

“Developers have been encouraged by increased letting activity among the schemes under construction with several schemes having achieved early-letting success over the last six months.”

In the City, nine schemes started bringing total space under construction to 4.1 million sq ft  – a 15% increase on six months ago and the first time construction has topped 4m sq ft since the first quarter of 2009.

The development profile of the City now shows just over half of the schemes as comprehensive refurbishments  – 14 out of 27 – the largest of which is QV Unit Trust’s 187,000 sq ft at 77 Queen Victoria Street.

While construction levels continue to increase, the decision to defer many scheme starts in 2009 and 2010 means that City completions remain low, with this year the lowest level for 25 years at 718,000 sq ft.

Looking forward, the recent rise in activity translates into higher levels of delivery in 2013, where 1.5m sq ft is scheduled to complete and a further jump in 2014 with 2.3m sq ft under construction.

Matthew Elliott, partner and head of City agency, said: “The City is a interesting market at the moment. Banks, traditionally the mainstay of the market, are sitting on their hands for understandable reasons.

“Some that could relocate are extending their leases for a few years rather than incur the considerable capex and lease commitment. But as banks retrench so insurers are boldly moving into new buildings and paying high rents.

“We are seeing the early signs of a change in the City’s traditional tenant mix towards a more diverse range of occupiers.

“With a reduced appetite for huge trading floors, that can be provided more cheaply in Canary Wharf, and greater demand for high quality, well connected but sensibly priced offices we are confident about the future of the Square Mile as an attractive place for businesses.

“The continuing conversion to residential of buildings in the West End, Midtown and other districts will further strengthen the City’s appeal.”

DJD London Office Crane Survey Winter 2012 (2)

Latest news

Bid rigging: Keltbray to appeal and so could Squibb

Both contractors "disappointed" with level of fines
3 days ago

Ten demolition firms fined £60m for bid rigging

Full details of fines with Erith and Keltbray hardest hit
3 days ago

Retail contractor J M Scully files administration notice

£23m turnover Dorset based contractor lodges court notice
3 days ago

Civils specialist M Lambe delivers record performance

Housing civils specialist seeks to diversify in face of challenging housing market
3 days ago

Willmott Dixon clinches £60m Oxford Brookes University job

Preparation work starts on two new buildings at Headington Hill campus
3 days ago

Ferns seals £50m+ Openreach network services deal

Five-year south west deal to provide civils, poling and complex manhole programme
3 days ago

20 firms win £4.5bn Southern construction framework

A dozen new firms secure spots on fifth generation public sector deal
4 days ago

Call grows for bolder 18m second staircase rule for flats

Architects, surveyors and builders professional trade bodies demand lower height threshold than proposed 30m
4 days ago

GRS Roadstone warns staff following cyber attack

Materials giant sends out letters highlighting the extent of the attack
4 days ago

Inland Homes to suspend shares as results delayed again

Auditors need more time to go through embattled house builder's books
4 days ago

Kier wins £73m Southport events centre job

Local supply chain set to benefit from major new project
4 days ago

Multiplex profit rebounds as margin restored to 2.9%

London tower builder predicts return to revenue growth this year as major schemes advance
4 days ago

Upbeat Vistry to re-open mothballed offsite factory

Former Countryside timber panel factories rebranded Vistry Works in revived drive to deliver 5,000 units a year
4 days ago

Builder crushed and blinded in wall collapse

Property owner in court after barn conversion goes horribly wrong
4 days ago

Keltbray bags £140m haul of energy infrastructure work

Specialist secures trio of power frameworks, two battery storage facilities and an energy from waste package
5 days ago

Government awards £1.8bn for energy retrofit schemes – list

Housing and public building decarbonising funds awards to support 20,000 construction jobs
5 days ago

Landmark London scheme switches from flats to student rooms

Regal London rethinks Old Kent Road scheme with 900 student rooms and 220 affordable homes
5 days ago

Align reveals designs for final portal of HS2 tunnel

Contractor confirms how final key structure on project will look
5 days ago

Plans in for 1.4m sq ft of industrial space at Fiddlers Ferry

Peel NRE to appoint demolition contractors for coal-fired power station in weeks
5 days ago

Tilbury Douglas to replace hospital hit by weak concrete

Stoke-on-Trent outpatients building containing Reinforced Autoclaved Aerated Concrete to be replaced
5 days ago

Derby picked as destination for Great British Railways HQ

Public vote secures Derby's bid to be nerve centre of the rail industry
5 days ago

London tower over historic Leadenhall market approved

Building work to start in 2025 on 32-storey tower by historic city market
6 days ago

PfH starts race for £520m housing decarbonising deal

Four-year framework covers service specific lots from £5m to £100m
6 days ago

“Rock solid” balance sheet and record results for Henry Boot

Firm sees early signs of recovery this year in core markets
6 days ago

£200m Edinburgh Haymarket office and hotel approved

Haymarket Yards scheme to move to construction in 2024
6 days ago

Countryside closes deal for £80m build to rent homes

Deal with private rental developer Sigma to speed up delivery at two sites
6 days ago

Wates commercial director joins Caddick

Neil Trubshaw one of a string of appointments as contractor looks to expand across the north
6 days ago

Fusion21 names 16 winners for £125m painting framework

Latest deal will last four-years for public sector clients
6 days ago

Watkin Jones breaks ground on Cardiff 700 flats scheme

Largest build-to-rent scheme in Wales gets underway
7 days ago

Green light for Birmingham 540-bed student scheme

Work to start on Gough Street student tower this summer
1 week ago

Contractor services