More gloomy news emerged today regarding prospects for office construction in the wake of Brexit. An annual report by Savills is predicting a major slump with up to half of planned developments in central London likely to be postponed or scrapped in coming years.
“Commercial development has barely recovered from the post-financial crisis slump, and the uncertainty surrounding the terms of Britain’s departure from the EU will trigger another 30% to 40% decline across the country in the next five years,” Savills’ report said.
This is not a paywall. Registration allows us to enhance your experience across Construction Management and ensure we deliver you quality editorial content.
Registering also means you can manage your own CPDs, comments, newsletter sign-ups and privacy settings.
“The seismic shock of the Brexit vote brought transactional activity in many cases to a juddering halt, a pause at least to reconsider pricing as opposed to pulling out of deals,” it added.
Savills is predicting a 4% fall in UK office prices next year followed by a 1% drop in 2018. Thereafter it forecasts a slow return to growth, pencilling in price increases of 1.1% in 2019, 2.5% in 2020 and 3.2% in 2021. This translates into 1.6% growth over the five-year period.
Big London developers Great Portland Estates, British Land and Land Securities have all announced poor results brought on by uncertainty in the wake of Brexit.
However, for some developers it is business as usual. This week the City’s biggest tower, 1 Undershaft, received planning permission and another tall City tower at 22 Bishopsgate has also been given the green light.
22 Bishopsgate developer, French-owned fund management firm Axa, had warned before the referendum that it might pull out in the event of a Brexit vote, but decided to push ahead in October. However it was also announced that the tower’s height would be reduced by four storeys – 22m – cutting off the stepped apex to create a flat-top skyscraper.
Planning documents lodged with the City of London reveal that there was concern about maximum crane heights impacting on aviation safety during construction.
The recent Deloitte crane survey – which covers seven major office markets in the capital – said that the amount of office construction in central London has hit 14.8 million sq ft, the highest amount since 2008.
The survey, which runs for the six months to the end of September, said 40 new starts had been made during the period.
But refurbishment work accounted for 28 of these projects – almost three-quarters – with the survey reporting the amount of new construction activity is down 42% on the previous figure.
