New office space in central London is at a 20-year high despite fears over the impact of the EU referendum, latest figures show.
A survey by consultancy Deloitte says builders started work on 52 new office developments in past six months in centre of the capital, the highest figure for past 20 years.
A total of 14.2m sqft of office space is now under construction, according to a survey which is carried out every six months. That’s more than at any time since the financial crash in 2008.
Between 2017 and 2020, 39m sqft of new office space will be coming onto the market.
A company spokesperson said: “The current boom in office space shows a continued confidence in London. It also shows how much pent-up demand there is in marketplace. While there is some long-term uncertainty because of referendum and its potential implications, it’s definitely business as usual in this sector of London’s commercial property market.”
The largest construction project under way in central London is at 100 Bishopsgate. US firm Brookfield Property Partners is building an 867,000 sqft skyscraper close to the Gherkin.
The biggest which broke ground in the past six months is the Fleet Building at 70 Farringdon Street, an 843,000 sqft project.
The survey comes despite fears that the 23rd June referendum on whether to stay in the EU or to vote for a ‘Brexit’ would hit demand for office space. Construction industry figures, including chief executive of Land Securities, have warned the uncertainty could have a negative impact, and investment in London office buildings has previously fallen off.
But demand dating back to financial crisis is driving the trend back up, says Deloitte head of occupier advisory, Chris Lewis. Demand is being driven by finance, technology, and media firms.
The supply of new office space is at its lowest in 15 years. Development has been below average for past five years, so little office space has been completed. However, current large number of new developments “is a surprise”, he added, offering tenants more choice.
Major developments tend to take between four and five years in their preparation stage, and once they’re under construction, it’s difficult to call a halt to them. Any effect from a ‘Brexit’ may well take some time to come to light, according to Deloitte’s researcher and author Shaun Dawson.
The amount of office space under development which has already been let stands at 42% - up on six months ago – and 70% of space which came onto letting market last year had tenants at end of construction.
Mr Dawson dismissed fears of a future over-supply. He said city is still “playing catch-up”. #Ecología