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The summer Deloitte London Office Crane Survey 2015 has shown construction in the Capital growing by 24% in the last 6 months; the total space under development now totals 9.5m sq. ft., with 31 new developments adding 4.4m sq. ft. to the ever growing crane presence in Central London.
Whilst this is welcome news in an ever tightening market – demand for space is far outweighing supply, with vacancy rates critically low across all London sub-markets – it must be noted that of the 9.5m sq. ft. under construction, 37% of space is already pre-let. Furthermore, the 9.5m sq. ft. that is under construction is only slightly above the 10 year average development level. This paired with the high levels of pre-let space means there will be little impact on 2015 availabilities.
Teresa Beatty, Surveyor at tenant acquisition specialist Morgan Pryce, believes the impact of the increased construction levels will only be seen by 2016 at the earliest,
“With the economic upturn in recent years and London’s continued presence as a global city, there has been a much needed increase in development and supply coming to the market. However, this increase will not be able to impact on the tight supply that will take hold of 2015. We expect more increases in rental levels and pre-let deals throughout the year. However, with the lack of supply developer confidence will inevitably grow, hopefully translating to more space being under construction over the next few years. Come 2016/2017 we will see a shift in power from landlords to tenants as supply finally catches up with demand…”
This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.