London’s commercial property market is witnessing huge changes in its physical appearance, with a massive 137% increase in construction intake, according to the bi-annual London Offices Crane Survey by Drivers Jonas Deloitte.
The past three surveys each detailed a rapid decline in development, culminating in a record low six months ago when a gaunt 2.7m sq ft of office space was under construction. Since then, twenty-five new schemes have supplemented a commercial property diet, now boasting 6.4m sq ft of new developments. A fat 2.8m sq ft chunk of that is in the City, with five new projects, the first rumblings of commercial property movement in eighteen months; 80% of that 2.8m is taken up by the waistlines of just three portly examples of commercial property – the Pinnacle, 20 Fenchurch St and the Leadenhall Building.
This transformation in appearance is attributed to the heightened confidence shown in London’s commercial property market by international investors. Admiring glances rest on London’s ‘power as a financial centre’ and as ‘a haven for foreign wealth’, according to Anthony Duggan, Drivers Jonas Deloitte’s head of research.
The survey earmarks 2014 as a key year for London’s commercial property market, when several of the projects are expected to show off their completed curves to investors. Just under half of the schemes weigh in at more than 100,000 sq ft, which means that, until they are completed, a shortage of suitable space will spell rises in rent for existing premium office space. A lean 2012 is expected, when just 120,000 sq ft is forecast to become available; 2013 is even more skeletal, with no planned developments expected to be completed at all.
This is a view backed up by CBRE, who predict prime office rents to peak in 2014, before the new developments come onto the market, single and ready to mingle with commercial property tenants and investors.
