Office construction in London has fallen 17 per cent over the six months to September, according to Deloitte
The total volume of office space under construction in London fell for the third time in a year, dropping to declining to 7.7 m sq ft over the six months, according to results from the firm’s latest London Crane Survey.
But the AJ’s sister title Construction News reported that completions reached a 10-year high over the same period, with 3.7m sq ft being completed.
Rafael Viñoly’s 20 Fenchurch Street and Rogers Stirk Harbour + Partners’ Leadenhall Building, popularly known as the Cheesegrater, were the main contributors to this space.
Less than half of this new space is available to let, with most having been leased out prior to the buildings’ completions.
The main hotspot of activity for new office construction was in the City, where there are 10 new buildings under way that account for 54 per cent of office construction in central London.
By contrast, there were no new starts in the Southbank, Midtown and the Docklands over the six months – the first time there has been no activity in Midtown for four and a half years.
Demolition increased by 18 per cent over the period, growing from 4.5m sq ft being demolished to 5.3m sq ft. Demolition in Midtown rose by 50 per cent over the same timeframe, suggesting more construction may be on the way.
Deloitte said that, as 2014 is the peak of the latest cycle of office development, with very few schemes committed to complete in the short term, there would be a low volume of floorspace being delivered in 2015.
According to Deloitte’s forecasts, the office development pipeline will not recover to 2014 levels until 2018. However, the firm argues that demand will remain robust and there will not be oversupply in the office sector.
“With occupier demand expected to remain strong, we foresee further increases in pre-letting activity and demand for the best space to exceed new supply for the next three years,” Deloitte Real Estate head of City leasing Steve Johns said.
“Nevertheless, with over 5m sq ft now being demolished – a rise of 18 per cent in six months – developers are racing against the clock to deliver buildings while new supply remains relatively low.”
Office construction falls 17% in London