New starts and refurbs decline across London office sector

According to the Winter 2024 edition of the Deloitte London Office Crane Survey, it has been a challenging year for the capital’s commercial sector, with the number of new starts and refurbishment schemes both down from the previous survey six months ago.

In this survey period (from April to September 2024) there were 343,741m² of new starts across 29 office schemes, representing a 12% decline from the previous survey.

Sounding a note of optimism, Caroline Waldcock, Real Estate Sector Leader, Deloitte UK, said: “The recent cut in interest rates by the Bank of England for the first time in four years, and continuing easing of construction cost inflation, could be the catalyst developers need to start a new scheme.”

Refurbishment starts dipped significantly in this survey, with volumes 57% lower than the Summer 2024 figures. Despite this drop, refurbishment remains an attractive choice for addressing evolving occupier requirements and targeted ESG credentials.

The survey pointed out that new start activity in the Docklands and King’s Cross areas is centred around life science developments.

These schemes create an opportunity to reinvigorate these submarkets by targeting life science occupiers – such as medical research labs, bioinformatics and medical tech firms.

Summing up, the survey predicts that geopolitics are likely to remain a top risk faced by developers and contractors. However, growth is anticipated, albeit at a slower pace than in the first half of the year. With the government changes in the UK and the US, Deloitte anticipates a shift in the geopolitical and the macroeconomic environment.