Everything You Need To Know About London Office Development In 7 Numbers

The London office development sector is in a funny place.

Before the coronavirus pandemic, with Brexit apparently sorted, confidence surged and new development picked up. Today, occupiers aren’t abandoning the need to move entirely, but confidence among developers is on the floor.

Here are the key stats from Deloitte’s comprehensive biannual review of the office development scene, the London Crane Survey.

112: The number of office schemes under construction in London. They total 15.3M SF, which is 29% up on six months ago due to the post-Brexit confidence surge, and 41% above the long-term average. The 5M SF of new construction started in the past six months is the highest figure on record. Almost half, 7.3M SF, is in the City, with 2.6M SF in the West End and King’s Cross the busiest submarket with 1.8M SF. 

1.4M SF: Ten schemes totalling 1.4M SF were on the verge of commencing in mid-March, Deloitte said. These are now highly likely to have been paused either temporarily or for a longer period. Overall, it said 60% of London office construction is paused as a result of the coronavirus. 

44%: The proportion of space under construction that is already pre-let, higher than the long-term average and reducing the risk of oversupply. In terms of which sectors are taking space, 38% of those pre-lets are from technology, media and telecommunications firms, highlighting the dominance of the sector. 

3-6 months: That is how long Deloitte thinks occupiers that were trying to decide on whether to move and where they might go will delay plans. “The majority of large pre-lets are strategic, five-year plans, often driven by lease expiries, and therefore unlikely to be abandoned,” it said. “However, small to medium-sized requirements, especially those based on expansion, are likely to decrease over the coming months as tenants defer planned moves and seek a short-term extension from their existing landlord until there is more business and economic certainty.”

100%: That lack of activity from occupiers has caused a collapse in confidence from landlords. Every single landlord surveyed by Deloitte thought the leasing market is worse than six months ago, with 57% thinking it is a lot worse. 

-12%: Flexible office providers took 12% of space in London during the last six months, according to Deloitte, but this figure is likely to drop significantly. With their offices closed, lettings for operators has plummeted: According to HubbleHQ, serviced office deals were down 90% in March. And once these offices are able to open again, social distancing will mean fewer desks and reduced revenue. 

27M SF: The London office development supply pipeline is clearly trending down in the wake of the coronavirus pandemic. There is 27M SF either underway or with planning permission but yet to start, a 5% reduction on six months ago. Deloitte said that the developers to whom it spoke said they would be further reducing their pipelines in the coming months.