According to Deloitte’s Summer 2023 London Office Crane Survey the race to avoid stranded assets has seen 37 office refurbishments start covering 3.2m sq ft.
This increase has been driven by a need to reach the anticipated Minimum Energy Efficiency Standard (MEES) regulations to achieve Energy Performance Certificate (EPC) B rating by 2030.
Demand is shifting to the highest quality space, with employers looking for space that attracts and retains talent, aligns with their brand, and embraces new working practices.
Sophie Allan, director in real assets advisory at Deloitte, said: “Developers seem to be cautiously optimistic about the future of London’s development pipeline.
“New infrastructure and expanding transport links have attracted people to previously overlooked areas like mid-town and the eastern fringes of the City.
“This is undoubtedly a vote of confidence in London after the intense disruption of the pandemic, disturbance to supply chains and rising inflation experienced over the past year.”
Overall new office starts have risen by almost 80%, when compared to the previous Winter survey.
Volume is now at 4.4m sq ft and new construction is starting across 50 schemes in total with average projects size up from 79,000 sq ft to 88,000 sq ft.
West End new starts are up for the second consecutive survey with the volume rising to 1.3m sq. ft., showing it is a market of increasing occupier focus.
The City has dropped to just under 600,000 sq. ft. in contrast and has seen a steady decline in activity over the past few survey periods.
Margaret Doyle, chief insights officer for financial services and real estate at Deloitte, said: “We expect that the need to bring offices up to scratch – especially in terms of energy efficiency – will drive London’s development for the rest of the decade.”