Office construction in London is down by 17 per cent over the last six months, but 22 new schemes have been started in the last six months, according to Deloitte.
According to Construction News, the total volume of office space under construction in London has fallen for the third time in a year, declining to 7.7 m sq ft this quarter, according to results from the firm’s latest London Crane Survey.
But completions have reached a ten-year high over the same period, with 3.7m sq ft being completed in the last six months. 20 Fenchurch Street and the 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’ completion.
The main hotspot of activity for new office construction was in the City - there are 10 new buildings underway, accounting 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 last six months - this is the first time there has been no activity in Midtown for four and a half years.
Demolition has increased by 18 per cent in the last six months, growing from 4.5mn sq ft being demolished to 5.3mn sq ft. Demolition in Midtown has risen by 50 per cent over the same period, suggesting that more construction may be on the way.
The survey argues that 2014 is the peak of the latest cycle of office development, with very few schemes committed to complete in the short term, leading to 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,” said Steve Johns, head of City leasing at Deloitte Real Estate.
“Nevertheless, with over five million 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.”