The pace of construction of office buildings in London slumped to a five-year low in the last six months, while the number of new building starts fell by almost 50%.
Around 12 million sq ft of office space is currently under construction, the lowest since 2014 and 10% less than six months ago, according to the London Office Crane Survey by consulting firm Deloitte.
Just four office schemes — totalling 200,000 sq ft — began their construction phase in the last six months in the City of London financial district.
That compares to the 1.2 million sq ft of office space that began construction in the Square Mile in the previous six months.
Overall, new building starts in London fell by 49%, with only 24 schemes beginning in the past six months. Some 37 schemes got underway in the previous six months.
Deloitte said, however, that the figures represent “a rebalancing of office development following a three-year high of new construction starts, rather than a worrying decline”.
The survey examines seven major central London office markets. Beyond the City of London, is looked at the West End, the Docklands, King's Cross, Midtown, Paddington, and Southbank, as well as three “emerging” submarkets, Vauxhall-Nine Elms-Battersea, White City, and Stratford.
Mike Cracknell, director of Deloitte Real Estate, said that there was a “softening” in confidence for speculative building, suggesting there was a move towards pre-letting buildings before beginning a project.
“Pre-letting is fast becoming the prerequisite for starting construction,” Cracknell said.
Meanwhile, 40% of developers who took part in the survey said that the office leasing market was a “little worse” in the third quarter of 2019, up from just 27% in the second quarter.