Office space across central London has been running at below-average levels for five years, according to the latest Crane Survey from Deloitte Real Estate. The report paints a picture of short-term supply constraints offset by underlying longer-term demand for space, with the next development cycle accelerating from 2016.
A rise in tenant demand is putting pressure on the current supply of Grade A space. In the short term, supply constraints are expected to tighten further, leading to rising rents in most areas of central London.
Improving economic conditions and London’s continuing desirability are likely to positively impact on future demand for office space.
Central London development pipeline (million sq ft)
“The developers that initiated schemes at the first signs of economic recovery in 2011/12 are now reaping the rewards, as their schemes complete at a time of reducing availability, increased tenant demand, and rental growth.
“It’s difficult to see how we will avoid a squeeze on supply across central London, and over the next 12 to 18 months, the lack of choice for some occupiers is likely to drive more pre-letting activity.
“But our analysis of the longer-term outlook for supply suggests 2017 and 2018 could be the years in which delivery really starts to recover, as the current wave of demolitions begins to translate into completed schemes.”
Anthony Duggan, Head of Research, Deloitte Real Estate
About the report
The Deloitte Real Estate London Office Crane Survey is the definitive survey of commercial construction in central London; this edition covers the six months to 31st March 2014.
The survey measures the volume and impact of office development (new build or significant office refurbishment of 10,000 sq ft) across central London over the next five years, and is widely used as a barometer of developers’ sentiment and future office supply.
About Deloitte Real Estate
Deloitte Real Estate redefines the concept of a full-service real estate business, offering a breadth of capability and an innovative approach unequalled in the market.
Combining property services with financial and business advisory expertise to deliver integrated solutions, we apply a depth of insight drawn from our understanding of all industries and sectors in an increasingly complex world.
For more information, visit the Deloitte Real Estate website.
|Read the full report
The London Office Crane Survey results in full.
|Explore the data
An interactive selection of key statistics from the survey.
|View the infographic
A visual snapshot of the key report findings.
|New London Development
An interactive map outlining London development activity.
|Real Estate Blog
Survey related blog posts from our experts.