The central London office sector presents some promising opportunities for new work over the coming quarters.
Work is set to get underway on a series of major new projects in the City and West End to meet the strong appetite for Grade A office space, particularly amongst employers seeking to accommodate staff returning to the office.
Office starts in London were worth £2.1 billion in the three months to August; more than two and a half times the level of a year earlier and accounting for almost three quarters of all starts in the sector nationally, according to the September Glenigan Construction Review.
Meanwhile, competition for prime space means large companies are searching for new HQ buildings up to five years before they are due to move.
BlackRock, the major US investment group, is reported to have asked agents to shortlist buildings that might be available to house its 3,000-plus staff when its next move is planned in 2035.
Strong underlying demand
The strength of underlying demand for highly specified new office space bodes well for development prospects in the capital. According to a recent report from agents Cushman & Wakefield, a record 80 per cent of central London office take-up in the second quarter was Grade A. It reflects a ‘flight to quality’ as firms seek space likely to attract staff back to the office.
There were 2.21 million sq ft of new central London space taken up in the second quarter of this year, the highest quarterly volume since 2020, and most of it pre-let to tenants. With just 6.76 million sq ft of space under construction and due for completion between 2026 and 2030, demand is expected to exceed the supply of new stock over the near term.
Significant pipeline
As it is, Glenigan data highlights some significant office projects set to get underway in the capital. The Bank of England has recently announced a £120 million refurbishment and alteration at its Threadneedle Street site in the City, with work set to start later this year and run for 49 months (Project ID: 25267337).
Other significant office schemes in the pipeline in the capital include the £500 million Camomile Park project at St Mary Axe in EC3 (pictured). Planning permission was granted in July for the 46-storey building for Axa Investment Managers involving almost 59,000 sq m of office space (Project ID: 24138635).
Planning consent was also granted in July for a £130 million commercial building at 85 Gracechurch Street, EC3, a 32-storey scheme for Hertshten Properties involving around 34,000 sq m of Grade A office space (Project ID: 22276673).
A planning go-ahead has also recently been granted to developer CO-RE for a £188.5 million, 34-storey office tower at 130 Fenchurch Street, EC3, involving some 57,000 sq m of space with a preliminary start date for next summer (Project ID: 14252496).
These are in addition to two other huge City office schemes which have secured planning approval and are moving through the sector pipeline. Multiplex Construction Europe is the ‘construction advisor’ on the £477 million, 53-storey office project at 99 Bishopsgate, where work is due to start next year. (Project ID: 23331236).
Meanwhile, demolition work has got underway ahead of construction starting on the £510 million, 74-storey office at 1 Undershaft-The Trellis in the City. It will provide almost 110,000 sq m of office space along with retail, restaurant, and museum space (Project ID: 15014016).
