Confidence is growing among developers about the outlook for the London office market with fewer developers now expecting the home working trend to have an impact on the demand for office space.
According to Deloitte’s London Office Crane (NYSE:CR) Survey Winter 2021, 37% of developers now expect home working to have no impact on leasing demand, compared with just 12% in the previous survey in May.
In the six months to September, work started on 3.4mln square feet of new office space in London, well above the long-term average of 2.4mln square feet.
The survey revealed that the number of new starts has fallen, but the average scheme size has increased by 28%, which could be a sign of greater risk appetite, Deloitte said.
Total office office space under construction between April and September was 13mln square feet, which was less than the previous six months but still above the long-term average of 10.7mln square feet.
Mike Cracknell, director in real estate at Deloitte, said: “The volume of new starts points to the resilience of demand for offices as an asset class, in spite of the dramatic shift in working practices in response to the pandemic and months of home working.”
Most developers said they have made progress with addressing climate change issues and a quarter expect all their developments to be net zero by 2024, with 45% expecting to reach this target between 2025 and 2029.