Silhouette of construction

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The London Office Crane Survey

What will high completion levels mean for London’s skyline in Q4?

Is the decline in current construction levels a cause for concern or a sign of a more manageable development pipeline? We analyse this year’s trends and highlights in the London Office Crane Survey 2018.

Key findings

  • Space under construction declined by 13% as several large schemes reached practical completion
  • The current pipeline remains above average, with 23% more new starts in 2018
  • This year saw 4.2 million sq ft in office completions, the highest level since Q1 2004 and more than double the previous survey results
  • Pre-letting activity continues to be strong, with 49% of space under construction already committed to, which is a gradual increase in the past few years


Download the full 2018 London Office Crane Survey report



2016 starts boost completion levels in 2018

Deloitte’s latest Crane Survey results show a 13% drop in office space under construction, an equivalent to 11.8 million sq ft. While we did see a higher number of new starts during the survey, the volume is down by 18%. However, the levels of new starts and the current level of construction activity continues to exceed long term averages.

Our survey findings show 4.2 million sq ft completed between April and September, which is the highest level since our summer 2004 survey and more than double on the previous study. High completion levels were largely due to the fact that a number of large schemes that began in 2016, finally reached practical completion.

2018 overall is also on course to produce the highest level of completed space since 2004. Aside the largest 825,000 sq ft completion, 2018 would fall short of the 2017 levels by 8%.



Pre-letting is on the rise

Locking in the right space is often crucial for attracting talent and driving business growth. Our study confirms this trend since as much as half of space under construction is already committed to, which is a gradual increase in the past few years.

Technology, Media and Telecom (TMT) firms are showing growing interest in securing London office space prior to completion, ahead of financial and corporate firms. Financial services have been reducing their office presence in London while co-working providers account for 12% of pre-lets.



No new starts in emerging submarkets

Following high completion levels in the last two years, construction activity in emerging London submarkets (Vauxhall-Nine Elms-Battersea, White City and Stratford) fell by 12%. The office markets in those areas are, however, primarily driven by large pre-lets and therefore more volatile.

Deloitte Real Estate’s new survey Where London Works further identified a number of new submarkets that are likely to see more office construction in the next 10 years, including Canada Water, Royal Docks, Earl’s Court, Old Oak’s Common and Clapham Junction.



Polarising prime and secondary office markets

The shift towards securing the best quality office space in order to attract and retain staff is becoming ever more evident. Occupiers are no longer cost focused when selecting property as poorer second-hand quality office accommodation is likely to hinder recruitment and affect the business. The growing share of pre-lets and higher levels of Grade A take-up confirms this trend.

However, the surplus of poorer quality space is unlikely to be absorbed quickly and is in danger of becoming obsolete. As larger businesses are releasing older accommodation, smaller occupiers have a choice to turn to co working providers instead of committing to second hand offices as they have done in the past.

The sharp rise in second-hand office vacancy is a cause for concern. Could this trigger more refurbishments as the demand for Grade A space continues?

Explore our data

Central London
22
Number of new
construction starts
200,000
sq ft
Total amount under
construction
Amount of space under
construction let

Key business sectors
leasing space

Office development pipeline

80
Number of schemes
under construction
9.9
Demolition level
million sq ft
% new build vs
% refurbishment

Central London office space under construction and volume of new starts

Occupier leasing activity on space under construction

TMT
28%
Financial
24%
Corporate
21%
Other
8%
Professional
8%
Legal
7%
Government
3%
Insurance
0%
Central London
vacancy rate %
9.56
Central London
take-up Q1-Q3 2018
(million sq ft)
Show all statuses
Existing scheme
New start
Completed
City
Docklands
King's Cross
Midtown
Paddington
Southbank
Stratford
West End
White City
Vauxhall-Nine      Elms-Battersea

Scheme number:

Scheme name:

Postcode:

Developer:

Tenant:

Completion date:

Total sq ft:

Space available sq ft:

Discover our infographics

About the London Office Crane Survey report

Established more than 20 years ago, the London Office Crane Survey monitors the supply of new office developments in the main central London markets and emerging submarkets. The report:

  • Is the most authoritative guide to current and future construction levels
  • Provides findings that are of importance to investors, developers and occupiers alike
  • Is regarded as a key indicator of London’s economic health.
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