London office project starts roar back

Aaron Morby 6 months ago
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London has seen the highest volume of new office starts on record – with 5.1m sq ft of construction starting across 43 projects.

The City of London is leading the resurgent spate of projects with new West End projects slowing
The City of London is leading the resurgent spate of projects with new West End projects slowing

Of these projects, five major schemes over 300,000 sq ft represented 40% of the total new start volume.

According to Deloitte’s Winter London Office Crane Survey refurbishment starts specifically have broken records with 34 projects underway delivering over 3m sq ft of space.

The surge in refurbishments is driven by both the anticipated tightening of Minimum Energy Efficiency Standard (MEES) regulations, and demand for premium grade office space meeting clients sustainability aims.

Including existing projects at the end of September, there were 124 schemes under construction across the central London market, with a total volume of 15.7m sq. ft.

This represents a 9% increase on the total construction volume recorded in the last survey.

Margaret Doyle, partner and chief insights officer at Deloitte, said: “Demand for premium office space is still fuelling rising construction new starts this year, but supply chain issues and other construction delays may continue to affect completion dates.

“Interestingly, developers we have spoken to seem to be more concerned about the supply of, rather than demand for, premium space.

“With the increased volume of new starts and completions reported this year, there is a healthy amount of prime office stock on its way to the market.

She added: “The current economic and geopolitical backdrop implies significant uncertainty about the future path of energy prices, inflation, and interest rates.

“But for now, developers seem prepared to bet that, if they build premium office space, the metropolis will continue to attract occupiers.”

Developers anticipate that they will achieve operational net zero across their portfolios by 2040.

However, developers highlighted the cost of construction as the biggest challenge in achieving net zero.

 

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