With 5.1 million square feet of development beginning across 43 projects, London has experienced the biggest volume of new office starts on record. Five significant schemes totalling more than 300,000 square feet accounted for 40% of the total fresh start volume.
According to Deloitte’s Winter London Office Crane Survey, refurbishment starts have shattered records, with 34 projects ongoing, totalling over 3 million square feet of space. The projected tightening of Minimum Energy Efficiency Standard (MEES) standards and demand for premium quality office space that meets customers’ environmental goals are driving the spike in refurbishments. At the end of September, there were 124 schemes under development in the central London market, with a total volume of 15.7 million square feet. This is a 9% increase over the overall construction volume recorded in the previous survey, reports Contract Journal.
“Demand for premium office space is still fueling rising construction new starts this year,” said Margaret Doyle, partner and chief insights officer at Deloitte. “However, supply chain issues and other construction delays may continue to affect completion dates.” Interestingly, the developers we spoke with appear to be more worried about the supply of premium space than the demand for it. With a higher volume of new starts and completions recorded this year, a substantial supply of premium office property is on its way to the market.
“The current economic and geopolitical backdrop implies significant uncertainty about the future path of energy prices, inflation, and interest rates,” she continued. But, for now, developers appear willing to bet that if they build quality office space, the city will continue attracting occupiers.”