New builds overtake refurbs in London office market

Grant Prior 5 months ago
Share

The level of office refurbishment starts has dropped below new build work for the first time since early 2020 in London.

The winter 2024 edition of the Deloitte London Office Crane Survey also revealed a decline in new construction starts and a decrease in delivered projects.

The survey – which collected data between April and September 2024 – recorded 3.7 million sq ft of new office construction starts across 29 schemes, representing a 12% decrease in volume compared to the previous survey. The figure remained above the 10-year average of 3.4 million sq ft.

Researchers recorded the start of 1.2 million sq ft across 18 refurbishment schemes – which represented a 57% decrease compared to the volume recorded in the previous survey. For the first time in 4.5 years, volumes of new build traditional offices marginally exceeded those of refurbishment.

Philip Parnell, partner and head of valuation and real estate climate & sustainability lead at Deloitte, said: “Refurbishment levels have pared back markedly in this survey from previous high levels, and likely a reaction to the economic, geopolitical and wider global concerns prevailing during the survey period.

“However, developers’ appetite to maintain their pipeline of activity, coupled with the continuing need to address evolving occupier requirements and ESG credentials, suggests this may be a blip rather than a trend.”

Life science schemes, which contain both laboratory and office workspaces, were responsible for 35% of new construction starts, representing 1.3m sq. ft. These developments are the main drivers of new activity in the King’s Cross and Docklands submarkets.

New construction fell across the other Central London submarkets, except for the City, which saw a 7% uptick in new office construction activity.

A survey of developers conducted alongside the crane survey indicated that there remains an overarching positive sentiment towards sustained growth in the development pipeline.

Developers’ optimism is high as 92% said their development pipeline will increase or stay the same in the next six months. The proportion of developers expecting a reduction in their pipeline is markedly less than two years ago (55% vs. 8%).

 Caroline Waldock, partner and real estate lead at Deloitte, said:  “Activity in the life science sector may reinvigorate quieter markets in the short-term, but demand for this space is less certain.

“Looking further ahead, the recent cut in interest rates and the easing of construction cost inflation could be crucial in boosting new scheme numbers. Our survey has recorded a renewed sense of positivity among developers that suggest the decreases we’ve noted may be short-lived.”

The survey recorded the delivery to market of 2.7 million sq ft of office space across 35 schemes, 28% less than the 3.8 million sq ft that was expected to be delivered.

These delays have contributed to the record high levels of ongoing construction – currently standing at 16.8 million sq ft.

Latest news

Comment: Gateway is acting like a barricade

Contractors left banging their heads on an (unbuilt) brick wall
18 hours ago

Final phase of £1.5bn Elephant and Castle revamp hits planning

Get Living submits revised plan for 500 homes and 450-bed student block
2 days ago

Ealing backs final phase of £1.3bn estate rebuild

Friary Park estate rebuild in Acton reaches end stage
18 hours ago

Green light for scaled-down Nottingham student tower

Glasshouse Street scheme will deliver 247 student rooms
18 hours ago

Aston Villa to revamp North Stand

Club to reuse existing structure rather than complete rebuild
2 days ago

Mace signs ex-ISG director to lead Euro health and tech push

Gary Sweeney to head up healthcare and life sciences consultancy arm
17 hours ago

Sir Robert McAlpine claws way back into profit

Firm says return to profit and strong cash balance validates new strategy
2 days ago

Severfield to cut staff by 6% amid pricing pressure

Steelwork contractor warns of extended tighter pricing due to project delays
2 days ago

JRL completes sale of 50% stake to Malaysian giant IJM

Deal boosts balance sheet and kicks starts growth plan
2 days ago

Green light for £100m Liverpool Baltic station build

Enabling highway works to start in the autumn
3 days ago

First live tests for flying construction robots

Drones can lay construction materials at height on site
2 days ago

Three firms land £170m Gentoo Sunderland housing deal

PHS Solutions, Esh and RE:GEN to deliver 10-year home upgrade plan
3 days ago

Gateway gridlock hits build-to-rent delivery as starts nosedive

Build to rent starts plunge 18% in the capital
3 days ago

Call to shift Gateway 2 checks to end building bottleneck

"The current system isn't working but we all want to see safe buildings"
3 days ago

GBN launches £600m bid race for SMR engineer roles

Owner engineers to provide technical and assurance services
3 days ago

Wates hires ex-Homes England chief to head public sector push

Robert Stone to spearhead its public sector and national frameworks strategy
3 days ago

Acheson Construction collapse costs suppliers £8.5m

One frustrated creditor seized a telehandler after contractor went into administration
3 days ago

Dominus wins go-ahead for 173-bed Glasgow scheme

Old Wynd Street job expected to cost around £25m to build
3 days ago

Safety Regulator misses deadline to clear Gateway 2 backlog

Investors pulling out of funding high rise buildings
4 days ago

CITB still sitting on £95m cash pile

Staff numbers jump from 666 to 763 as training body wage bill soars
4 days ago

£500m road surfacing framework market call

NEPO goes out to consultation on north east regional highways deal
4 days ago

Two share £220m Scottish rail repairs and minor works deal

AmcoGiffen and CPMS win civils and building repair deals
4 days ago

Builder wanted for £60m London leisure and flats job

Tower Hamlets aims to replace St George’s Leisure Centre in Shadwell
4 days ago

Contractor confirmed for business park expansion

Roe Developments to start on next phase of Castle Donington scheme
4 days ago

Driver escapes injury as scaffold collapses onto van

Major three-lift scaffold fall blocks north London high street
1 week ago

Gilbert Ash to be sold to staff

£267m turnover contractor to transition to an Employee Ownership Trust
1 week ago

M Group seals biggest-ever deal with Telent takeover

Digital infrastructure specialist deal lifts turnover to £3bn
1 week ago

Aggregates firm Ashville went down owing more than £3m

Debts revealed in Companies House update
1 week ago

Cardo saves 100 jobs at Breyer roofing arm

Private equity-backed Welsh maintenance group continues to expand
1 week ago

Excavator knocked off lorry going under bridge

Traffic Commissioner inquiry after accident in south London
1 week ago

Contractor services