Developers take a risk to build new a million ft2 of unlet office space.
A new survey by Drivers Jonas reveals a new swath of speculative building in the City and the West End, despite the fact that there is 26 million ft2 of office space still unoccupied in London.
Figures from Drivers Jonas’ Central London Crane Survey show that speculative development in the City has doubled to more than a million ft2 in the last six months, while in the West End it has increased by 20%.
The surveyors said the increase coincided with an upturn in commercial construction projects. They warned that, as the first rise in construction activity for three years, the news should be greeted cautiously.
Matthew Elliott, head of London leasing at Drivers Jonas, said that without a strong demand from big investment banks and an increase in merger and acquisitions activity on the stock market, there was little to drive business demand for new offices. “Without the banks, these buildings are not going to be let and nobody wants to see an emerging recovery in the City stifled by too much development, too early in the property cycle,” he said.