Signs of confidence
In another indicator of rising confidence in the capital, the Drivers Jonas Deloitte Crane Survey has recorded 25 new schemes in London offices construction projects, with a total of 6.4m sq ft now under construction compared with an all-teim low of just 2.7m sq ft six months ago.
The firm notes that the buildings being built are big – nearly half of the current schemes on site are more than 100,000 sq ft. Three new towers – 20 Fenchurch Street, The Pinnacle, and The Leadenhall Building – will provide more than 160 floors of additional space in the City in 2014, while in the West End construction activity has reached a two-year high at 2m sq ft and with a record number of new starts.
Anthony Duggan, head of research at Drivers Jonas Deloitte, says the survey indicates a “dramatic positive change” in construction activity and notes that the race is now on to deliver new space in order to take advantage of the dwindling supply of Grade A space in 2012 and 2013.
However, despite increased construction levels, Drivers Jonas Deloitte notes that the amount under construction remains below average, with just 120,000 sq ft being delivered in 2012 and nothing currently scheduled for 2013. “This lack of new supply puts further pressure on the level of available space with rents expected to continue to rise as occupiers compete for the best stock,” it adds.
Matthew Elliott, head of transactions at Drivers Jonas Deloitte, comments: “The lack of buildings will drive up rents over the next couple of years. As a tenant, you could wait until 2014 when there will be more choice but the rents will be higher. So the savvy larger occupier will be looking to commit to pre-lets – this way you get the building you want at today’s rents.”
