A number of firms looking to make more eco-friendly workspaces has helped contribute to London office development roaring back, the findings of a new study suggest.
There was a new start volume of 5.1 million sq ft across 43 schemes, according to accountancy group Deloitte's latest Crane survey which covers the period from April to September 30.
This is the highest volume of new starts since the survey was extended to track new construction activity across seven central London submarkets in Summer 2005.
A chunk of the work comprises refurbishment starts, with those projects breaking records for the second consecutive survey with schemes covering 3.3 million sq ft.
That has in part been driven by landlords preparing for the anticipated tightening of Minimum Energy Efficiency Standard (MEES) regulations.
Philip Parnell, partner and real estate valuation lead at Deloitte told the Evening Standard: “The seven six-monthly surveys that we’ve undertaken since Q3 2020 have all shown refurbishment activity outstripping new-build."
He added: "This 'rise of the refurbishment' is a sure-fire indicator that for accommodation to be relevant to the occupational market it needs to be of grade A quality, which in turn is now synonymous with offering strong ESG credentials. Whether it be to align with their ESG and net zero commitments, or to attract and retain an increasingly discerning workforce, occupiers now expect their accommodation to provide an outward demonstration of their ambitions.”
Meanwhile Deloitte's Sophie Allan said: “New builds have roared back from their post-pandemic nadir, which has likely been driven by large pre-lets and growing developer confidence in the demand for premium office space."
A number of firms are betting on occupier demand being strong for modern space that will entice staff in, even if they are only in headquarters for part of the week.
The report said developers anticipate that they will achieve operational net zero across their portfolios by 2040. However, firms pointed to the cost of construction as the biggest challenge in achieving that.
The research also showed that a high volume of starts were in the City with 2.4 million sq ft of office space starting across 16 schemes. But West End ones declined 13%. That was in part due to a number of developments completing during the survey period.