Office construction in the City of London has grown to a five-year high, according to a new report.
The latest London Office Crane Survey from Deloitte Real Estate found that over five million sq ft is now being developed across 23 schemes in the area in the City. This figure extended to the rest of the capital with 9.7 million sq ft of developments being spread across 71 schemes. It highlights the increasing demand for office space whether it being companies relocating from London or simply expanding.
Deloitte's report stated that one of the driving forces behind this rise in office space construction is the improving sentiment in the City. Developer confidence is also improving thanks to the reduction of levels of Grade A space. Take-up of this space is expected to reach a three-year high in the coming months making shortages more prevalent during the next 18 to 24 months prompting rental growth in the City market.
Commenting on the survey, Anthony Duggan, head of research at Deloitte Real Estate, said: "2014 is currently set to deliver the largest amount of space into the Central London office market for ten years. This is good news for the increasing number of companies looking for office space in a market where supply is reducing and shortages are appearing."
It was different story in the West End of London where there was a considerable drop in construction activity. Work decreased by 36 per cent to 1.5 million sq ft but there was high level of completions which had grown to 1.2 million sq ft since the survey was taken over the last six months.
Deloitte's survey comes in the wake of the latest Markit/CIPS UK Construction Purchasing Managers' Index which showed that the construction had reached a six-year high. It highlighted that the sector was at 59.4 in October, up from 58.9 in September, displaying considerable growth over recent months.
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