The latest Deloitte London Office Crane Survey makes for interesting reading.
Construction across central London is at an eight year high, with nearly 15m sq ft of offices currently under development; that's over 41% above the 10-year average of 9.7 million sq ft.
Deloitte points out whilst the figures sound impressive and should be read as positive, there are two important factors that are masked by the results. Firstly, construction periods have been extended and completion dates have, on average, slipped by a quarter, secondly, new starts is down compared to the survey carried out in the summer.
An interesting point to note as well is that refurbishments play a bigger part in the overall analysis, accounting for 70% by volume of new starts. It's likely these will come to the market sooner than new builds commenced at the same time, meaning more office space will be available, meeting growing demand, in 2017.
My views on the report are generally positive. Whilst the move towards more refurbishment may be a sign that the market isn't committing to major projects during due to market uncertainty caused by events like Brexit and the US Election results, it does hopefully mean more of London's office estate is being improved and brought up to current standards - a win in my book for sustainability and energy efficiency in the capital.
The analysis also shows that demolition is up by 12%, again, I see this as a positive sign that developers are readying themselves for a push on new build and development once market conditions improve.
One thing is for certain. I always believe London is always a good barometer for the industry, and with a continued push within the market for more space in the capital, we can continue to see opportunities for growth and development supporting the UK economy over the coming year.
Key findings from our latest crane survey - The volume of office construction has increased by 4% over the past six-months to 14.8 million sq ft, an eight-year high - However, construction momentum has slowed – 40 new schemes started over the past six months, compared with 51 in our last survey - 41% of the space currently under construction has already been let - Developers concern over future tenant demand - We continue to forecast rising delivery in 2017 and 2018, but the peak has shifted to 2019-20 - Prime rents expected to fall in 2017 with incentives moving out - Emerging submarket construction activity to complement central London supply - Internet of Things and new technology is set to revolutionise the workplace with the creation of Intelligent Buildings.