London’s West End Leads the Way in New Office Construction

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01 June 2023

London has seen a record volume of office refurbishment starts, according to Deloitte’s Summer 2023 London Office Crane Survey.

37 new refurbishment schemes covering 3.2 million sq. ft were recorded, the highest number and volume of refurbishment starts since Deloitte began tracking them across the seven central submarkets in 2005.

New office starts have risen by almost 80 per cent when compared to the 2022 Winter survey. Since then, the average new scheme size has risen from c.79,000 sq. ft to c.88,000 sq. ft.

 

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Deloitte attributes this increase to the race to reach Minimum Energy Efficiency Standard (MEES) regulations to achieve Energy Performance Certificate (EPC) B rating by 2030.  Demand for Class A office buildings in light of new hybrid working practices might also be responsible.

 

Picture: a photograph of Sophie Allan. Image Credit: Cushman & Wakefield

 

Sophie Allan, Director in Real Assets Advisory at Deloitte, said: “Developers seem to be cautiously optimistic about the future of London’s development pipeline. Positive signs include a huge increase in the volume of new starts compared to the previous survey, and the highest volume of refurbishment starts on record, as developers race to avoid obsolescence. New infrastructure and expanding transport links have attracted people to previously overlooked areas like mid-town and the eastern fringes of the City. This is undoubtedly a vote of confidence in London after the intense disruption of the pandemic, disturbance to supply chains and rising inflation experienced over the past year.”

West End new starts are up for the second consecutive survey with the volume rising to 1.3 million sq. ft., and The City has dropped to just under 600,000 sq. ft. in contrast and has seen a steady decline in activity over the past few survey periods.

Margaret Doyle, Chief Insights Officer for Financial Services and Real Estate at Deloitte, said: “Following pandemic-induced home working mandates, many businesses are now encouraging office attendance more proactively and are considering how to attract employees back to the office. Tenants’ shift toward quality over quantity has led to desire for attractive, sustainable, well-kitted out space, close to transport hubs and amenities. We expect that the need to bring offices up to scratch – especially in terms of energy efficiency – will drive London’s development for the rest of the decade.”

 

Picture: a photograph of Steve McGregor. Image Credit: DMA Group

 

Steve McGregor, Group MD of DMA Group, a property maintenance specialist working across the capital says that vacant offices requiring significant upgrades could be a crucial resource: “There will be an increasing demand around London’s fringes as those environments and less expensive workplaces become more attractive. Specific agents specialise in those locations too. The demand for large, hi-tech, smart, efficient, ‘green’ building developments has been high in The Square Mile amongst larger organisations for some time, as they seek to occupy appealing locations to enable their users to combine work, rest and play which allows them to attract and retain the best talent more efficiently and effectively.

“However, that demand has left vacant offices requiring systematic upgrades and refurbishments to embrace those smart-tech options, thus ensuring they remain attractive to tenants. It’s crucial that they repurpose these spaces to embrace workplace expectations and the demands of hybrid and remote working as well.”

William Poole-Wilson, Founder and MD of London-based workplace strategy architects WILL+Partners, said: “Our own work across the financial services sector, we are seeing that leaders are actually embracing new office designs that support their energy management and sustainability targets. The circular economy and recycling nature of our recent project in London’s Europe Arab Bank in Park Lane made it one of the UK’s first and has already resulted in significant reductions in the Bank’s waste and energy use. 

 

“Whilst it is not surprising that the City is seeing a drop off in new office construction, the office is still needed. Working from home isn’t good for the environment. It has the potential to damage the education of young workers across the sector and it removes teamwork. At present, most people see it as an entitlement through the lens of self as opposed to community building, collaboration, or communication.”

–William Poole-Wilson

Founder and MD, WILL+Partners

 

“Whilst it is not surprising that the City is seeing a drop off in new office construction, the office is still needed. Working from home isn’t good for the environment. It has the potential to damage the education of young workers across the sector and it removes teamwork. At present, most people see it as an entitlement through the lens of self as opposed to community building, collaboration, or communication.”

Picture: a photograph of the river Thames from above, showing Tower Bridge and the City of London. Image Credit: Pexels

Article written by Ella Tansley | Published 01 June 2023

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