A strengthening in office projects, both refurbishment and new build, is set to bolster opportunities in the next year and beyond.
The underlying value of office project starts (schemes valued at £100 million or below) fell by 19% last year but the Glenigan forecast predicts a strong rebound this year. Starts should rise by 8% then motor on to increase by 12% in 2025.
Glenigan economics director Allan Wilén comments: “A strengthening economy is expected to support a recovery in both new build and refurbishment projects over the next three years.
“While the overall office space requirement won’t reach pre-pandemic levels, the rise of hybrid working is driving demand for more modern and collaborative workspaces through refurbishments and fit-out projects. Companies are also increasingly subletting their existing space, creating further refurbishment opportunities.”
Glenigan’s construction industry research has identified more than 7,000 office-focused projects valued at £500,000 or more, where work is expected to start on-site in the next 12 months.
Many refurbishment and conversion schemes are in the pipeline. These range from smaller proposals such as a £600,000 plan to convert an existing steel barn in Bamber Bridge, Lancashire, into offices with a start expected in August (Project ID: 24099062) to a £40 million plan by Bentley Motors to revamp a car showroom in Pyms Lane, Cheshire into offices. (Project ID: 23038867). Work is expected to begin on this scheme in November.
Other proposals are in procurement. Bids from contractors have been received for the £117 million Vinegar Yard scheme in south London (pictured), where work is expected to begin in October (Project ID: 19138276).
Of the more than 7,000 £1 million-plus offices schemes set to start construction over the next year, nearly 500 are based in London.
This strong pipeline ranges from relatively smaller schemes such as a £33 million plan to demolish 56-65 St Leonard Street in Hackney, East London, and build a 10-storey office building with work starting in November (Project ID: 10417103). Major schemes include a £477.8 million plan for a 74-storey office building in the City of London known as 1 Undershaft – The Trellis, which will be considered by the City of London’s Planning committee during July (Project ID: 15014016). If approved, work could begin by the end of this year.
A strong pipeline of major projects was a feature of Deloitte’s recent London Crane Hire Survey, which reported work starting on 42 schemes to deliver four million square feet of space.
Glenigan’s own construction industry research shows that more schemes continue to start on-site.
Multiplex Construction Europe recently secured permission from insurance giant AXA to begin work on the £480 million 50 Fenchurch Street scheme, which will provide 650,000 sq ft of office space in the heart of London (Project ID: 19410738).
Overall, the south of England is set to deliver the largest amount of office projects expected to start on-site during the next year.
A total of 916 schemes will start construction in the South East, while another 570 should begin in the South West.
In the South East, these range from a £25 million office extension at Farnham Road in Guildford (Project ID: 23163564) to the Royal Agricultural University’s £100 million plan for an Innovation Village Business Park in Cirencester (Project ID: 23021988)
With more and more workers returning to the office, demand – and opportunities for the construction industry – should continue to rise.
