The City of London’s booming office tower market is generating substantial construction contracts in the coming year.
Developers are launching multiple high-rise projects in response to increasing demand and premium rents for energy-efficient Grade A office space, creating valuable bidding opportunities for contractors.
In recent weeks, City of London planners have given the go-ahead for a huge 74 storey office block at 1, Undershaft which will match the height of the Shard, the country’s tallest building (Project ID: 15014016).
Meanwhile, plans have been submitted by French-owned Axa IMLts for a 46-storey building in the City with a public park at its base on a site at 63, St Mary Axe (Project ID: 24138635, see details below)
This boost to the work pipeline from large offices comes as contractors are set to become busier on large projects in the capital. Glenigan data shows that major project contract awards in London were worth £1.99bn in the quarter to January, up 6% on the period a year earlier.
The outlook for large schemes in the capital is also brightening. Major project detailed planning approvals in London, at £3.54bn in the three months to January, were up 32% on the previous quarter.
‘Larger requirements’ for space
Tenant demand for new large office space remains buoyant. A recent report on the central London office market from agents Cushman & Wakefield pointed to a ‘notable uptick in larger requirements of 250,000 sq ft and above.’
The agent also notes the strength of the take-up of Grade A space and says rents have seen some of the strongest growth on record. Last year, a record 17 leases were reported to have been signed on City of London office space with a rent above £100 per sq ft.
In all, the agent points to a central London construction pipeline of 15.18 million sq ft of office space with two-thirds of it due to be delivered in 2025.
Widespread opportunities
Glenigan data highlights the widespread opportunities for new work on major City of London office projects.
One large flagship project due to start this summer is Evergo Tower (pictured) at 120 Fleet Street where Lendlease has been appointed construction manager on a £429 million design & build project. It involves the demolition of the existing River Court building and a new development with two basement levels, a ground floor, and 20 upper storeys, creating over 78,000 sq m of space (Project ID: 21327874).
Meanwhile, demolition work is underway before work starts later this year on the £400 million Dovetail Building at Cutlers Exchange on Houndsditch in the City. It will involve a ground floor plus 23 upper storeys and a floor area of almost 67,000 sq m of space. Lendlease is the construction manager on the scheme, where work is set to run for 51 months (Project ID: 21354221).
In January, detailed plans were approved for 99 Bishopsgate, a £477 million development for clients Brookfield Developments Europe and 99 Bishopsgate Real Estate SARL. Multiplex Construction Europe is the construction advisor on the scheme which involves a huge 53-storey building with over 144,000 sq m of space. Construction work is set to start in autumn next year and run for 37 months (Project ID: 23331236).
Work on Axa Investment Management’s proposed £500 million development at St Mary Axe – called Camomile Park – could start in autumn next year and will involve a new 40-storey building with almost 59,000 sq m of office space and public green space (Project ID: 24138635)
Meanwhile, work started before Christmas on a separate major City of London office project for Axa Investment Management at 50 Fenchurch Street. Multiplex is the main contractor on the £400 million development involving a 36-storey tower and where work is set to run until 2027 (Project ID: 19410738).
