London office market rebounds with record level of new starts

The London office development market has yet again shown its resilience with a record number of new construction starts across the capital.

According to the latest Crane Survey by Deloitte UK, which covers the period from 1 April to 30 September, the volume of new starts – 474,000m² – was the highest seen across the seven Central London submarkets since the company began tracking them in 2005.

“As we have been forecasting for the past few surveys, new starts are dominated by refurbishments: at 306,500m², this is the highest on record, for the second survey in a row,” said Siobhan Godley, Real Estate Leader, Deloitte UK.

The survey also highlighted the fact that new builds have roared back from their post-pandemic nadir in the Summer 2022 survey. This time, new builds accounted for more than a third of the volume of new starts, with two of the biggest – 2 Finsbury Avenue and 2 Aldermanbury Square – both in the City.

There is increasing acceptance and realism about sustainability requirements, with most developers now expecting to reach operational net zero across their portfolio by 2040. Developers expect that tenants will accept certain ‘green lease’ clauses, especially those that save them money, but may be more resistant to any attempt to ‘pass-through’ capital costs of upgrades.