London office construction during the six months ended 30 September fell as completions hit a 14-year high, according to Deloitte Real Estate.
Deloitte Real Estate’s London Office Crane Survey revealed that office space currently under construction in central London stood at 11.8m square feet, representing a 13% decline from six months ago. The current figure is still above the long-term average of 10.5m square feet.
According to the report - which covers seven major central London office markets - 40 London office schemes were completed during the period, lifting completions to 4.2m square feet, making it the highest level of office space brought to market in over 14 years.
The survey recorded 32 new office construction starts across the capital, a 23% increase on the previous survey, adding 2.6m square feet into the development pipeline.
Mike Cracknell, a director in the capital projects advisory team at Deloitte Real Estate, said: “With 40 schemes totalling 4.2m square feet completing this survey, this is the highest level of office space brought to market in over 14 years.
“2018 is witnessing unprecedented office completions and we are expecting almost seven million square feet to be completed before the year is out. The 13% decline in construction is therefore driven by these completions rather than any significant reduction in new starts.”
The West End broke ground with 12 new schemes (754,000sqft) – the highest volume of new starts since early 2015, increasing this submarket’s total to 1.7m square feet under construction, the report stated.
The only other Central London submarkets to record new starts this survey were Midtown with seven new schemes, Southbank and King’s Cross recorded one each, it said.
Cracknell said: “Developer sentiment remains positive with above average new construction activity. There is a healthy balance with a strong occupier demand and half (49%) of the office space under construction is already committed to.
“Tenants with larger requirements simply cannot afford to wait for speculative schemes to become available. Locking in the right space is often crucial for attracting talent and driving business growth.”
According to the survey, pre-let activity shows corporate firms, including co-working providers, increasing their share to 21% (1.2m square feet) of pre-let space.
“Flexible co-working space providers taking grade A office space are enabling start-ups to emulate the talent strategy of the tech titans, rather than having to settle for secondary space, Cracknell said.
“Consequently, tightness in the grade A market is offset by a relative glut in the secondary office space market.”