London office work shifts towards major refurb projects

Aaron Morby 6 years ago
Share

The construction of new offices in central London is at its highest level in three years with 37 schemes breaking ground in the last six months.

According to the latest Deloitte crane survey the office sector is remaining resilient despite Brexit uncertainty with 3.5m sq ft started over the period, 38% up on the previous survey last autumn.

Overall new build figures were significantly boosted by four new starts at King’s Cross – including Facebook’s new HQ – representing nearly 1m sq ft of all new starts.

The biggest sector of the London market, the Square Mile, has started to see a pronounced shift towards large-scale office refurbishment.  Over this period developers began work on eight refurbishments, which will deliver 800,000 sq ft of Grade A space.

The survey also highlighted some concern that the longer term forecast office pipeline of 30m sq ft, is nearly a quarter down over the last two years.

The latest biannual survey recorded 13.2m sq ft of office space now under construction – a 12% increase on the previous survey.

Mike Cracknell, director at Deloitte Real Estate, said: “London’s office market remains resilient in the face of uncertainty as we witness an encouraging increase in new construction starts. This is testament to developers’ continued confidence in London’s office leasing market long-term.”

He added that the uptick in construction activity in the run-up to the originally scheduled EU departure date of March 2019 was remarkable, given the magnitude of political and economic uncertainty.

He said that it demonstrated that developers had not delayed their construction plans and had confidence in the London leasing market over the long term.

The City of London continued to dominate construction activity with 6.7m sq ft across 33 schemes representing half of total volume under construction across the capital.

Among the top concerns for landlords and developers, Brexit uncertainty was cited by around a quarter. But longer term issues of ‘lack of development sites’ (32%) and ‘construction costs’ (32%), were the top two challenges for landlords.

Among key package contractors, most firms expected to see a little increase in work over the next 12 months, although the strength of positive sentiment has waned with the exception of external works firms.

The results around price sentiment in the Q1 2019 survey suggest an average 3% rise in prices over the next 12 months – similar to the figure reported in the Q3 2018 survey.

The exception was in demolition where significant price increases are being forecast.

Payment periods are on the increase from main contractors, suggesting harder times ahead.  Payments within 30 days fell from over 40% to less than 30% of the total.

Latest news

House builder Camstead goes into administration

Work stopped on three current sites
17 hours ago

ESS Modular went down owing suppliers £7m

Modular specialist owned by ISG owner Cathexis
16 mins ago

Willmott Dixon wins £36m leisure centre upgrade

Historic Westminster 1930s Grade II listed Seymour Centre
17 mins ago

Graham wins £100m Cardiff Crossrail phase 1

Work on route to Cardiff Bay to start before end of next year
23 hours ago

Laing O’Rourke appoints new European MD

Peter Lyons to take-up new role in February
2 days ago

Profits dip at Stepnell ahead of demerger

Turnover and secured workloads up ahead of restructure
2 days ago

HS2 green bridge deck takes shape

100m-wide wildlife bridge to carry hedgerows and country lane over HS2
23 hours ago

1,000-home Wolverhampton city centre scheme in for planning

ECF and council advance City Centre West build to rent scheme
2 days ago

Sisk clinches £54m North London council HQ revamp

Haringey's iconic Grade II listed civic centre to be brought back into use
2 days ago

Ofgem approves £2.5bn Eastern Green Link 1

Work to start next Spring on cable project from Scotland to the north of England
2 days ago

Anglian Water hunts for £1bn delivery partner

Programme delivery partner wil integrate with client team over 15-year plan
2 days ago

Hadden collapse costs supply chain £6.7m

"Highly unlikely" subcontractors will receive anything for their unpaid invoices
2 days ago

Management buyout at M&E specialist

£25m turnover Kimpton in second MBO in its 60-year history
2 days ago

BAM finalises £71m deal to replace first major RAAC school

Work to start on new St Leonards Catholic School in Durham
2 days ago

Scaffolder hit by two tonne weight at nuclear plant

Court hands out £633,000 in fines after Dungeness B decommissioning incident
2 days ago

Go-ahead for 860,000 sq ft East London medical campus

Whitechapel Road scheme of six new and repurposed buildings
2 days ago

Site labour rates hit record high as cost inflation returns

Industry's biggest payroll firm says rates rose nearly 5% last month in London
5 days ago

Morris & Spottiswood acquires part of ISG fit-out division

ISG Cathedral acquisition saves 111 jobs and expands presence across England
6 days ago

New work drives Q3 construction output uplift

Third quarter activity up 0.8% despite slowdown in September
5 days ago

Octavius cuts concrete formwork strike time by 5 days

Temperature probes reduce times for safely striking formwork
5 days ago

Plan for 200-home student-led London scheme

Developer Regal is behind new Camden Town scheme
5 days ago

Green light for new £45m tax office in Portsmouth

HMRC to occupy new office complex with construction starting next year
5 days ago

Extra tunnels included in £6bn East West Rail scheme

Government unveils plans for two new tunnels in Cambridgeshire
6 days ago

Infrastructure to get £80bn boost from public sector pensions

New "megafunds" will invest in UK construction projects
6 days ago

Bidders wanted for £800m building safety framework

Fusion21 launches renewal of deal across 12 lots
7 days ago

Winchmore wins £6.5m brickwork package on Stratford flats

Latest award from Graham on £69m development
6 days ago

Motts/Jacobs JV to design £2.5bn West Yorkshire Mass Transit

First construction could begin in 2028
7 days ago

Muse signs landmark deal to redevelop Solihull shopping centre

Mell Square scheme includes 1,600 homes at 6.4ha town centre site
7 days ago

Reds10 raids house builders for two director hires

David Newey and James Bateman join as regional ops directors
1 week ago

Builder killed as telehandler overturns

House builder goes into liquidation before court hearing and £160,000 fine
1 week ago

Contractor services