A new survey has revealed building activity in central London has hit a new high, increasing 28 per cent in the past six months…
Despite the latest data for the Markit Construction Purchasing Managers’ Index (PMI) revealing a slight decline in output from 59.9 in September to 58.8 in October it is clear some sectors are thriving.
One area that has benefited from the push for more construction projects is London. According to a new survey from Deloitte Real Estate building activity across the capital has soared during the last six months, reaching a new seven-year high.
The Crane Survey, which tracks building activity, showed 26 new starts during the period. These projects had a combined total of three million square feet and taking the amount of space under construction in central London to 11m sq ft.
According to the data, The City office market saw the most new starts, with 13 in total. This included Brookfield’s 100 Bishopgate—a project that spans 867,000 sq ft. In fact, The City saw overall construction increase by a quarter to 5.7m sq ft.
However, despite the rise in activity it is worth noting these latest figures have not reached the last high seen in 2002 of 19.5m sq ft. It has also come at a time when vacancy rates in the capital are at a 15-year low. This has put significant pressure on rents.
Deloitte Real Estate’s head of research, Will Matthews said many schemes that were put on hold following the financial crisis were still trying to play catch up.
Speaking to City AM, he said: “We expect that just 3.3msq ft of space will complete in 2015, the lowest amount for three years.
“Looking ahead though, the development pipeline for 2017-19 is filling up as work commences on new schemes,” he said.
The data also revealed technology, media, and telecommunications firms took the lead with 44 per cent of office space leased during construction in the last six months. This was followed by the financial services, which saw 27 per cent of lettings.
Matthews added: “Ultimately the rise in office development recorded in our latest crane survey comes after five years of relatively low delivery, which has exacerbated the current shortage of available Grade A stock.
“This new space will not be completed for some time and we forecast further upward pressures on rental levels in the short term.”
