The profusion of prime office developments underway across London and various other regions is creating a wide range of promising new work opportunities for contractors.
Driven by strong demand for energy-efficient, Grade A business space, which can help firms attract and retain staff, developers are starting work on a growing number of office developments of varying sizes.
April’s Glenigan Construction Review shows that total office project starts were worth just over £4 billion in the first quarter, January-March; a rise of 75% compared to both the previous three months and also the same period last year.
Insights from the Review highlight that London accounted for the lion’s share of new office development activity. Office project starts in the capital were helped by some large City of London projects and big data centre schemes, which were worth almost £2.9 billion in January-March, more than double the level a year earlier.
Other regions also saw a healthy expansion of new office starts in the first quarter, notably the South West (starts rose 15-fold), Scotland (up 55%), Northern Ireland (starts rose more than 16-fold), and the North East.
Future work pipeline
Yet in terms of the future work pipeline, the capital currently offers the brightest prospects in the office building sector. Glenigan data points to a 90% increase in the value of office planning approvals in London in the first quarter, compared to last year.
The healthy outlook for the capital’s office building sector is reflected in the latest Deloitte office crane survey for London. It notes that developers are confident about the resilience of demand among occupiers for grade-A office accommodation.
Sensing a potential ‘office supply gap’ between 2027 and 2020, the survey shows most developers expect that their office pipeline will either ‘increase’ (58%) or ‘remain stable’ (34%) over the next 12 months. Three-quarters of developers also reported feeling ‘more positive’ about leasing demand.
Meanwhile, refurbishment projects, which accounted for two-thirds of all new office starts in the capital last year, involving some 3.1 million sq ft of space, remain popular with developers.
Glenigan project data highlights various major new office projects in the City of London where construction is set to get underway in the coming months.
Work on the £330 million Alliance House scheme at 60 Gracechurch Street, an office tower of 36-storeys plus ground floor and basement levels, is set to start later this summer. Bovis is the main contractor on the scheme, which involves over 52,000 sq m of new space (Project ID: 24112367).
Meanwhile, construction work on the huge £477 million, 53-storey office scheme at 99 Bishopsgate (pictured) is also set to get underway later this summer. Detailed plans have been granted on the project involving over 144,000 sq m of new office space (Project ID: 23331236).
Elsewhere, demolition work is underway, and planning conditions are being resolved with a view to construction starting next spring, on developer Stanhope’s so-called mega-tower at 1 Undershaft – The Trellis. The huge 74-storey office complex, costing £510 million, will involve over 154,000 sq m of space and is at the pre-tender stage with work set to run for 60 months (Project ID: 15014016).
Major projects are becoming more significant
Glenigan data points to these major projects becoming increasingly significant within the overall office construction pipeline. Whilst the total value of underlying planning approvals for office projects was down in the first quarter compared to last year, it actually rose by 2% for major office projects worth over £100 million.
Certain regions beyond the capital also offer a growing work pipeline for office construction. Glenigan project data shows that the value of detailed planning approvals in the South East in the first quarter was up by 48% compared to last year, and was significantly higher in the North East (up almost tenfold) and in Wales (up by 157%).
