Construction work in central London is at its highest level since the financial crisis as the technology industry drives an economic boom in the city.
New office buildings in the centre of the capital are going up at a rate 18% higher than six months ago, according to a report by Deloitte Real Estate. There are now 77 office schemes under construction covering 11.1m sq ft the most since 2008.
A collection of new City skyscrapers are among those keeping construction companies busy. These include 100 Bishopsgate, which will house the Royal Bank of Canada, while Principal Place is to be the new UK base for Amazon.
The surge in developments will add to fears that the London economy is becoming further detached from the rest of the country, but the increase is in part because projects were scrapped or put on hold after the financial crisis owing to funding problems.
Some are now being revived, such as 100 Bishopsgate, where plans have been in place for years, while the shelving of projects has also led to a shortfall of new office space in the West End and City.
There has also been a 24% rise in the number of sites being demolished and prepared for construction in the last six months.
Steve Johns, head of City leasing at Deloitte Real Estate, said: “Cranes will be dominating London’s skyline for the foreseeable future as construction activity keeps pace with healthy occupier demand.”
Many of the new developments already have anchor tenants, although 21 of the 26 new projects started in the last six months are speculative.
Johns said: “4.3m sq ft of the 11.1m sq ft under construction has already been let, up 22% from our last survey. Looking ahead, developers’ sentiment remains high, as 21 of the new starts totalling 2.6m sq ft are speculative developments.”
The rapid growth of the technology industry is fuelling developments in London. Of the leasing deals already agreed, 44% are with technology, media and telecoms companies, while just 27% are with financial services groups, the traditional occupiers of space in central London.
Construction in the City has risen by a quarter in the last six months, while the West End enjoyed a 5% increase.
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