{"id":85654,"date":"2020-11-23T10:10:50","date_gmt":"2020-11-23T10:10:50","guid":{"rendered":"https:\/\/www.pbctoday.co.uk\/news\/?p=85654"},"modified":"2020-11-23T10:10:50","modified_gmt":"2020-11-23T10:10:50","slug":"office-construction-falls","status":"publish","type":"post","link":"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/office-construction-falls\/85654\/","title":{"rendered":"London office construction falls, as remote working takes over"},"content":{"rendered":"<h2>New office construction in central London has declined by half in six months, as occupier demand weakens, according to <a href=\"https:\/\/www2.deloitte.com\/uk\/en.html\" target=\"_blank\" rel=\"noopener noreferrer\">Deloitte<\/a><\/h2>\n<p>The construction of new offices in central London has declined by half in six months, according to Deloitte Real Estate\u2019s latest London Office Crane Survey.<\/p>\n<p>Siobhan Godley, partner and head of Deloitte Real Estate, said: \u201cAs a bellwether of developer sentiment and <a href=\"https:\/\/www.pbctoday.co.uk\/news\/energy-news\/a-greener-future-for-the-post-covid-19-office-space\/76919\/\" target=\"_blank\" rel=\"noopener noreferrer\">future office supply<\/a> in the capital, this crane survey shows a decline in new construction starts to just 2.6 million sq ft across central London.<\/p>\n<p>\u201cThis is down significantly on our previous survey, but remains broadly in line with the survey\u2019s long-term average.<\/p>\n<p>\u201cNotably, a higher than average 40% of new construction starts have already been pre-let, indicating less speculative construction.\u201d<\/p>\n<h3>Delays and leasing demand<\/h3>\n<p>The total office space under construction in central London is now 15.1million sq ft. This is similar to the level recorded in the previous survey (15.3 million sq ft, the highest since 2002) as developments are now taking longer to complete.<\/p>\n<p>Mike Cracknell, director at Deloitte Real Estate, commented: \u201cOur data reveals that 3.3 million sq ft of office construction was not completed as scheduled between April and September and remains under construction.<\/p>\n<p>\u201cHad these projects completed on time, the total volume under construction would be almost a quarter lower.\u201d<\/p>\n<p>Leasing demand became the biggest challenge to new development this survey. The developers\u2019 sentiment survey revealed that 57% of respondents said letting conditions were either the same or worse when compared to the end of March this year.<\/p>\n<p>Cracknell added: \u201cOf the developers we surveyed, a clear majority \u2013 85% \u2013 pointed to weak tenant demand as the major obstacle to starting any new development.<\/p>\n<p>\u201cUntil there is more clarity about occupiers\u2019 office plans, developers will hesitate to embark on new projects, particularly speculative ones.<\/p>\n<p>\u201cNonetheless, the <a href=\"https:\/\/www.openaccessgovernment.org\/oxford-covid-vaccine\/98023\/\" target=\"_blank\" rel=\"noopener noreferrer\">news about vaccines<\/a> has already resulted in a re-rating of real estate stocks, and may see both a bigger shift back to the office in the short term, and a strengthening of investor demand in London offices over the medium term.\u201d<\/p>\n<h3>\u2018A shift towards major refurbishments\u2019<\/h3>\n<p>This reluctance to embark on new <a href=\"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/london-office-construction\/57228\/\" target=\"_blank\" rel=\"noopener noreferrer\">office construction<\/a>, especially new builds, has led to a shift towards major refurbishments.<\/p>\n<p>The survey found that more than two thirds of the new construction starts involved an extensive upgrade of existing office stock across 28 separate projects.<\/p>\n<p>\u201cBy transforming outdated buildings into Covid-safe, high-quality workspaces, developers are looking to upgrade and futureproof their offices in a market where occupational demand is increasingly discerning,\u201d added Cracknell.<\/p>\n<h3>Construction activity falls<\/h3>\n<p>The city of London, which dominated office <a href=\"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/uk-construction-activity\/83522\/\" target=\"_blank\" rel=\"noopener noreferrer\">construction activity<\/a> in previous surveys, has seen new construction activity fall by 60% to 1.2 million sq ft across 10 schemes.<\/p>\n<p>Notably, just under half of the city\u2019s new construction starts are available to let, again suggesting a lower appetite for speculative development.<\/p>\n<p>Richard Hammell, UK head of financial services at Deloitte, said: \u201cThe financial services sector has for many years occupied the lion\u2019s share of City office space, considering its office portfolio an essential part of doing business.<\/p>\n<p>\u201cEven before the pandemic, the sector was actively looking to reduce costs and consolidate its office presence in central London as many functions were distributed across the UK and offshore, and there was an increasing use of automation.<\/p>\n<p>\u201cThe seismic shift in people working from home this year has served to accelerate this trend.<\/p>\n<p>\u201cWhile specific in-person aspects of business life most valued by this sector \u2013 such as business development, efficient trading, client engagement and employee collaboration \u2013 mean that offices will remain part of financial services, the nature and operational use of space will adapt in the years to come.\u201d<\/p>\n<p>Godley concluded: \u201cThe UK is leading the way with remote working across Europe. Nearly three quarters (72%) of UK employees would like to work remotely more often in the future \u2013 <a href=\"https:\/\/www2.deloitte.com\/uk\/en\/pages\/consulting\/articles\/voice-of-the-european-workforce-2020.html\" target=\"_blank\" rel=\"noopener noreferrer\">10% higher than that of European peers<\/a>.<\/p>\n<p>\u201cDevelopers and investors are acutely aware of this growing trend and are thus in a state of suspension before committing to new projects, until there is more clarity in the market and occupiers reveal their future of work strategies.\u201d<\/p>\n<div class=\"mk-custom-module-container\">\n<\/div>","protected":false},"excerpt":{"rendered":"<p>New office construction in central London has declined by half in six months, as occupier demand weakens, according to Deloitte.<\/p>\n","protected":false},"author":16,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[304],"tags":[676,54592,997,908,947,567],"stakeholder_rel_tag":[],"contributor_rel_tag":[],"class_list":{"0":"post-85654","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-planning-construction-news","7":"tag-construction","8":"tag-coronavirus","9":"tag-development","10":"tag-economy","11":"tag-london","12":"tag-planning-system"},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v26.9) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>London office construction falls, as remote working takes over<\/title>\n<meta name=\"description\" content=\"New office construction in central London has declined by half in six months, as occupier demand weakens, according to Deloitte\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/office-construction-falls\/85654\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"London office construction falls, as remote working takes over\" \/>\n<meta property=\"og:description\" content=\"New office construction in central London has declined by half in six months, as occupier demand weakens, according to Deloitte\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/office-construction-falls\/85654\/\" \/>\n<meta property=\"og:site_name\" content=\"Planning, Building &amp; 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