If you’ve been to London recently, you may have noticed a lot of cranes, busy at work, constructing new office real-estate. However, the latest research from business consultancy Deloitte, shows there has a been a 9% decline in office construction in the past six months.
All measures of office real-estate construction activity were lower in the second half of 2017, the report shows. The detail Deloitte was most concerned about, though, was the volume of new space under construction.
According to its data, just 1.8 million square feet of London real-estate is under development. That’s the lowest amount since Deloitte’s 2014 Summer Crane survey and also some 21% below the survey average.
Sign of a broader slowdown?
With fewer new construction projects currently being undertaken across London, Deloitte suggests it could be a sign of broader real-estate construction slowdown.
“While not necessarily a leading indicator of further activity slowdown, the current volume of new starts certainly indicates caution on behalf of developers earlier this year,” Deloitte said in the survey.
The business consultancy firm points to Brexit-related caution as the main driver behind the decline in new office build starts in the city.
“Since the announcement of the UK’s referendum result to leave the European Union in June 2016, business and political landscapes have endured a rollercoaster ride of uncertainty,” the survey report states.
West End Construction on the up
However, while office real-estate development in the city has fallen, the west end has seen an increase in the number of new developments being undertaken there.
After declining for two years, there were 14 new development starts in London’s west end in the last six months. That’s the largest number of new starts on record and means 1.4 million square feet of real-estate is under construction in the area.
Despite the slowdown in new starts, Deloitte’s analysis shows 2017 remains on course to see the highest level of completed real-estate since 2004.