Survey predicts resurgence of London office developments in 2023

A desire for high-quality office space is driving increasing demand for Grade A accommodation in ‘a flight to quality’, according to the latest twice-yearly Deloitte London Office Crane Survey.

Next year, the London office development pipeline is forecast to grow as 2023 is likely to be the post-pandemic ‘Year of the Catch-up’ on completions. As a result, refurbishments remain a strong feature of new construction activity, representing 26 of the 31 new starts during the last six months.

Margaret Doyle, Chief Insights Officer and Partner for financial services at Deloitte, said: “The past year has been characterised by an uptick in post-pandemic refurbishment activity. Looking forward, 2023 could turn out to be the year when the highest volume of new office space is delivered for 20 years.

“However, this will depend on whether supply chain disruptions, labour shortages, financing difficulties or material price inflation cause further completion delays. Looking further forward to 2025, we anticipate it will be the ‘Year of the Investor’ as renewed pressure on stock stimulates rental growth, creating a wave of fresh opportunities for developers.”

According to the survey, more than three quarters of developers (81%) said their new developments will achieve net zero by 2034.

Philip Parnell, Partner and Real Estate Climate & Sustainability Lead said: “With tenants seeking better quality accommodation offering demonstrable Environmental, Social, Governance (ESG) credentials, developers are focusing increasingly on the refurbishment of existing stock.”