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Thu November 30 2023

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Office building in London at highest for three years

20 May 19 The construction of new offices in central London is at its highest level for three years, according to Deloitte Real Estate’s latest London Office Crane Survey.

The latest biannual survey of construction activity in the capital recorded 37 new schemes breaking ground in the last six months adding 3.5 million sq ft into the development pipeline.

The total office space under construction in the capital is 13.2 million sq ft – a 12% increase on the previous survey.

Deloitte Real Estate director Mike Cracknell said: “London’s office market remains resilient in the face of uncertainty as we witness an encouraging increase in new construction starts. This is testament to developers’ continued confidence in London’s office leasing market long-term.”

The average size of new developments increased from 80,000 sq ft to 96,000 sq ft this survey and King’s Cross saw four new starts representing a 26% share of all new starts.

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Meanwhile the City of London continues to dominate construction activity with 6.7 million sq ft across 33 schemes. This is more than half (51%) of the total volume across the capital. The City has also seen a shift in favour of large-scale refurbishments versus new builds as developers began work on eight refurbishments which will deliver 800,000 sq ft of Grade A space.

Office development in the West End is up 10% on the previous survey and currently has 1.9 million sq ft under construction across 27 schemes. Midtown and King’s Cross also experienced a rise in construction levels, increasing their square footage under construction by 7% and 65% respectively.

Mike Cracknell continued: “Quite simply developers would not start construction if the demand for leasing offices was not there, or expected to be there, especially in the submarkets outside of the City, West End and Midtown. Over half (55%) of the office space under construction is already let and for larger schemes over three quarters (78%) is already committed to. Notably occupiers in the financial services sector have pre-let 2.1 million sq ft of space that is still under construction. This is a 50% increase in six months and suggests there is confidence the sector remains committed to London.”

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