London Office Construction Hits Four-Year High

Office construction in the capital has hit 9.7m sq ft, a four-year high, a report has found.

Construction activity has more than tripled since 2010, when it reached its post-recession low.

The amount of space under construction has reached 4.5m sq ft, up 10% since November 2012.

In the first quarter of 2013, 33% of the space under construction in the capital had been pre-let. The figure is a big increase on the same period in 2011, when only 1% was pre-let.

Leasing activity has almost doubled from six months ago – good news for landlords, who are gaining the upper hand as the lowest levels of Grade A space for five years means occupiers are in heavy competition for space.

This year will see 1.6m sq ft of completions, the highest level for seven years. Mayfair will see the largest influx of space for several years, with 400,000 sq ft completing this year.

However, the primary focus for new development in the West End is outside Mayfair: the report found that north of Oxford Street and Victoria are emerging as attractive locations, with developer confidence driving construction activity and occupier demand driving rental rises of 74% and 51% respectively.

Less popular London markets have also seen a surge: at King’s Cross, where 800,000 sq ft is under construction, floorspace is up by 68% since the previous survey. Midtown has 722,000 sq ft under construction; while the Southbank has 982,000 sq ft under construction.