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London office building at post-Brexit referendum high

Deloitte survey shows 13.2m sq ft of space under construction, up 12% on the figure six months ago

London

NEW office building in central London is at a three-year high, with 13.2 million square feet of space under construction, up 12 per cent on the figure six months ago, Deloitte Real Estate's London Office Crane Survey said on Monday.

"London's office market remains resilient in the face of uncertainty as we witness an encouraging increase in new construction starts," said Mike Cracknell, a director at Deloitte Real Estate. "This is testament to developers' continued confidence in London's office leasing market long-term."

Some 55 per cent of the office space under construction was already let and for larger schemes of over 100,000 sq ft, more than three quarters was already committed to, Deloitte said.

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"Notably occupiers in the financial services sector have pre-let 2.1 million sq ft of space that is still under construction," Mr Cracknell said. "This is a 50 per cent increase in six months and suggests there is confidence the sector remains committed to London."

The survey covered seven major central London office markets - The City, West End, Docklands, King's Cross, Midtown, Paddington, Southbank - as well as three emerging submarkets - Vauxhall-Nine Elms-Battersea, White City and Stratford.

In last November's survey, Deloitte had said demand would continue even with the impending exit of Britain from the European Union (EU), with technology, media and telecom companies taking up most spaces in the city.

International Trade Secretary Liam Fox, a Brexit supporting senior minister, said the survey showed construction at its highest level since the 2016 Brexit referendum.

"This is a far cry from the doom and gloom predicted when the UK voted to leave the EU in 2016 and reinforces the City's global pre-eminence as an investment destination," he said.

The city's massive financial services sector, however, remains downbeat about accessing EU markets after Brexit, City of London financial district chief Catherine McGuinness told Reuters last month.

Nearly 300 financial firms in London have shifted about £1 trillion in assets to new hubs in the EU to mitigate the uncertainty and avoid disruption to customer ties.

But Mr Fox told an audience at the International Financial Services Forum on Monday that he remained convinced that London would "emerge fitter, stronger and more dynamic than ever" once the Brexit dust settles.

"We recognise your difficulties, we recognise your importance, and we want to work with you to give certainty and stability wherever possible as we move towards our new deep and special partnership with the European Union," he said in a speech.

Deloitte, a professional services firm, has been publishing its London Crane Survey for the past 23 years. REUTERS