May 21, 2014
Supply of new office space in London continues to fall short of demand
One of the downsides to London’s attractiveness as a business destination, as we reported yesterday, is its inability to provide enough office space to satisfy the rapacious demands of the companies who want to work there. Survey after survey reveals the same thing. Even though London has a healthy pipeline of new offices under construction, it cannot keep pace with demand. The latest survey to make the same point comes from Deloitte Real Estate whose London Crane Survey claims that the 9.2 million sq. ft. of office space currently being built will fall short of what is needed. The report claims that London office space is likely to remain in short supply for two years as the new occupancy levels of offices continues to outstrip supply. The report claims that 2014will see 7 million sq. ft. of Grade A office space delivered, the largest volume for over a decade but nearly half has already been let even before construction is complete.
Anthony Duggan, partner and head of research at Deloitte Real Estate, said: “Developers that started office development 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. There are currently just ten Grade A buildings in central London that are available to let as a whole, and only five which can offer an occupier 100,000 sq ft of space or more, which is severely limiting choice.”