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New-build resurgence boosts London office pipeline

Foster + partners' bloomberg offices
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A resurgence in new-build activity has boosted construction in the capital, according to Deloitte’s latest crane survey.

New-build offices now account for the largest share of project starts at 2.6m sq ft, with the average office size rising from 70,000 sq ft in the consultant’s previous survey to 113,000 sq ft over the past six months.

Deloitte’s previous crane survey in November last year suggested clients had begun to shift towards refurbishment schemes rather than new buildings, with retrofit jobs making up 70 per cent of the capital’s office starts in the six months to November 2016.

However, the latest crane survey shows that new-build now accounts for 50 per cent of all office starts in London, with the addition of Multiplex’s 22 Bishopsgate (pictured bottom) accounting for 40 per cent of the volume of new space started in the past six months.

The survey also revealed that there were 28 office construction starts in the capital over the period – 30 per cent lower than six months earlier but still comfortably ahead of the 10-year survey average of 22.

London’s overall development pipeline now stands at 13.9m sq ft, down 6 per cent from the previous survey.

Deloitte Real Estate managing partner Nigel Shilton said the survey’s findings did not necessarily point to a slowdown in developer appetite for office schemes in the capital.

‘Very few schemes have been cancelled, highlighting continuing developer confidence’

’The decrease in overall volume of space under construction could suggest that developers have slowed down, yet this is more a result of timing and two years of elevated levels of construction completing, rather than developers holding off,’ he said.

‘Very few schemes have been cancelled, highlighting continuing developer confidence.’

Demolition levels in London remained high at 7.9m sq ft, while the survey showed the majority of companies in the capital expected an increase in workload over the coming 12 months.

The City of London is the busiest market, with 10 new schemes totalling 1.9m sq ft added to the pipeline in the past six months, taking the total to 8.2m sq ft.

Occupier demand also remained strong, with 43 per cent – 6m sq ft – of the total pipeline under construction being pre-let.

The consultant added that the new developments were already attracting significant tenant demand, with 10 of the new schemes to have started on site in the period reporting successful leases.

Deloitte added that the number of office projects completing in London is set to hit its highest point since 2003 by the end of this year.

The capital saw 3.9m sq ft of space complete in the past six months, the largest volume delivered in the capital since 2004, while the consultant expects that total to rise by the end of 2017.

Of the 3.9m sq ft completed in the six months, half was pre-let.

Deloitte is now forecasting 39m sq ft of office space will be delivered in the capital by 2021.

Plp 22 bishopsgate credit riverfilm martin richardson

Plp 22 bishopsgate credit riverfilm martin richardson

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