Brexit effect on office construction in central London
07 July 2016
Mike Cuthbert, head of construction advisory at Deloitte Real Estate, comments on the effect Brexit is likely to have on office construction in central London:
“Our London office crane survey shows an increasing pipeline of new office space under development across central London. Construction activity has nearly doubled from 7.7 million sq ft in late 2014 to over 14 million sq ft today. Demolition levels also increased by 12% in our last survey to 7.1 million sq ft.
“Our forecast at the end of March 2016 anticipated 38 million sq ft of office space will be delivered up to 2020, including what is already under construction. The report questions the capacity of the industry to deliver this amount of space. This is borne out by the fact that the completion dates for more than a quarter all schemes have moved back by more than three months in the past six months. The reasons for delay are undoubtedly specific to each scheme but the pressures around skills and capacity of the industry to deliver remain as pertinent today as before the Brexit vote: lack of skilled labour, insufficient experienced construction managers, and a lack of design team resource.
“In the short term, we expect these pressures to be exacerbated by Brexit and a weaker Sterling. However, in the medium term, we envisage that these pressures will ease as schemes are deferred and capacity returns to the market.”
The latest London office Crane Survey was published in May 2016 and the next report will be published in mid-November 2016. Deloitte Real Estate’s collection of central London development data commenced in 1985, and the first London Crane Survey was published in 1996. The crane survey is the definitive review of office construction in central London, and is seen as a barometer of developer sentiment and future office supply.
Notes to editors
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
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