Economic Recovery? Exploring London's Office Construction And Refurbishment Boom In 2024
Introduction
We at MCJP are based at 230 City Road, Clerkenwell East. Here, we look in ore at the developments that are happening around us. Opposite us is The Arc, an innovative blend of residential and commercial spaces offering more than 100 new homes designed with sustainability at their core. This 22-story tower emerges from a red brick base, mirroring the industrial essence of its unique setting. Recently, The Arc was honoured with four awards at the International Property Awards 2021/2022. It's a fantastic building that will bring even more business to our area, which has to be a positive. So, we got to thinking, after the economic doom and gloom, are new buildings a trend we see walking us toward economic recovery? With this in mind, we researched this article to see if this was happening all over London, and spoiler alert, it's all looking very positive!!
The City of London, known as the financial heart of the UK, is experiencing a remarkable resurgence in office space construction. With investors returning to the capital's financial centre, the Square Mile is witnessing a flurry of activity as major projects take shape and redefine the City's skyline.
In this article, we delve into the exciting developments taking place in London's office space sector in 2024. From record-breaking starts to ambitious refurbishments, we uncover the key trends and highlight the impressive scale of growth that is transforming London's landscape.
The Rise of London's Office Space Construction
London's office space construction is reaching unprecedented levels in 2024. According to the City of London Corporation, over 9 million square feet of floor space is currently under construction, equivalent to the size of around 10 'Cheesegrater' buildings or 18 'Gherkins'. This surge in development can be attributed to various factors, including increased investor confidence, rising demand for premium office spaces, and the need to modernise existing infrastructure.
The City Corporation's winter 2023 London Office Crane Survey revealed that the volume of new office starts had reached a record high. Across 43 schemes, a staggering 5.1 million square feet of new construction has commenced. This represents a 16% increase compared to the previous survey, with the average new scheme size rising to approximately 119,000 square feet.
Refurbishments Driving Growth
Our building at 230 City Road was refurbished, and we moved into it just after the pandemic. It seems that refurbishments are playing a pivotal role in London's office space development pipeline. The City Corporation's survey highlighted that refurbishment starts have broken records for the second consecutive survey. A total of 34 schemes, covering 3.3 million square feet, are undergoing refurbishment. This surge can be attributed to the tightening of Minimum Energy Efficiency Standard (MEES) regulations and the growing demand for sustainable, Grade A office spaces.
Sophie Allan, Director in Real Assets Advisory at Deloitte, emphasises the significance of refurbishments in London's development pipeline. She states, "Refurbishments continue to play a critical role in London's development pipeline as the increasing need to modernise office space to avoid obsolescence grows." These refurbishments not only enhance the quality of office spaces but also contribute to the creation of vibrant and dynamic environments for businesses and visitors alike.
London's Delegation to MIPIM 2024
London's office space construction achievements will be showcased at MIPIM 2024, Europe's largest real estate conference. The City Corporation aims to demonstrate to global developers and investors that London remains the premier destination for building and investment opportunities. The construction heat map, revealing the scale of ongoing projects, will undoubtedly impress attendees and highlight the City's potential for growth and innovation.
The City of London's Economic Resilience
The City of London's construction boom is a testament to its economic resilience. Despite the challenges posed by the pandemic, the City has rebounded, attracting major players in the financial and professional services sectors. The City Corporation's figures reveal a 25% increase in planning applications and approvals compared to the previous year. This surge in activity, coupled with positive Transport for London (TfL) data, indicating a return to pre-pandemic levels of Tube usage, underscores the City's enduring appeal.
Furthermore, the competitive rents for office space in the Square Mile, combined with the high demand for Grade A office spaces, have spurred significant investments in retrofit schemes. Grade B offices are being upgraded to meet the demand for "best in class" office spaces. Notable occupiers such as HSBC, Clifford Chance, Apple, and TikTok have either returned to the City or secured leases, reinforcing London's status as a global business hub.
The City of London's Commitment to Sustainability
We try hard with our sustainability goals, knowing this is an important issue, and this seems to be a hot topic at the moment for the City. In line with global sustainability goals, the City of London is prioritising environmentally conscious office space construction. Developers aspire to achieve operational net-zero carbon across their portfolios by 2040. The anticipated Net Zero Carbon Buildings Standard (NZCBS) will play a pivotal role in guiding developers towards sustainable practices. However, developers acknowledge that the cost of construction poses a significant challenge in achieving net-zero targets.
Philip Parnell, Partner and Real Estate Valuation Lead at Deloitte, explains, "Occupier focus on premium space, coupled with addressing the anticipated MEES deadline and drive to net-zero, is continuing to provide a strong stimulus to refurbishment activity." This commitment to sustainability not only aligns with global environmental objectives but also positions London as a leader in sustainable construction practices.
The Development Pipeline and Future Outlook
The London office space development pipeline remains robust, with numerous projects in progress. As of September 2023, 124 schemes are under construction across the central London market, representing a total volume of 15.7 million square feet. This marks a 9% increase compared to the previous survey period. The completion of approximately 4 million square feet of office space across 45 schemes in central London further reinforces the City's growth trajectory.
Looking ahead, the future holds the promise of additional skyscrapers adorning London's skyline. Three large developments have recently obtained planning permission, setting the stage for further expansion. This ongoing construction activity, coupled with stable demand and a healthy supply of prime office stock, bodes well for London's status as a thriving business ecosystem.
Conclusion
London's office space construction in 2024 is a testament to the resilience and dynamism of the City of London. With over 9 million square feet of floor space under construction, the City is experiencing a remarkable transformation. From all this, we are excited about the future! We are taking a really positive view on it all, as for us, more office space means more need for quality creative print products. From hoardings and window graphics to art! New builds and ambitious refurbishments tell us we are all heading in the right direction for a bright future for all businesses within London!
A Bit About Us
MJCP (More Juice Creative Print) are a leading Central London creative print production company. With over 25 years of experience, our skilled team of friendly and approachable professionals specialises in producing beautiful, innovative print media with first-class craftsmanship and quality, all in-house. If you need any help or advice, please contact us at any time.