In this article we look at the latest Deloitte London Crane Survey “Life Beyond the Pandemic” (a report that measures the volume of office development taking place across central London and emerging London submarkets) and compare its findings to the previous 2020 Crane Survey and what it means for London office refurbishment.
In 2020 it was predicted that the demand for flexible office space would grow for both large and small businesses across London. The survey forecast that London office fit out work would take priority over the building of new office space in the short term and potentially for some time to come. The report also anticipated that there would be an oversupply of poorer quality office workspace which would not be taken up even when the market recovered because businesses looking for office space would have their pick of better quality offices. It predicted that landlords would need to look at fitting out their buildings and workspaces with a view to improving their existing office stock to be flexible, “sustainable, ‘healthy’ and ‘WELL’ buildings”.
So does the latest survey support the predications above?
The latest survey starts by highlighting the various “issues” that have contributed to how office development has been impacted over the last year. They explain:
- an increase in covid-19 cases led to further restrictions and the Brexit deadline made for uncertainty in the development market.
- a third national lockdown stalled recovery at the start of 2021.
- travel restrictions made deals difficult.
- as a consequence of covid-19 home working was prevalent in many London businesses which had an impact on the leasing office space in central London, with many businesses preferring to “wait and see” before committing to new London office space.
However despite the difficulties above Deloitte’s London Summer 2021 Office Crane Survey paints a positive picture (for the most part).
London Office Refurbishments Lead A Rise In New Starts
For the third survey in a row there was an increase of 20% in the volume of new construction starts (new build and office refurbishments) to 3.1m sg. ft across central London from September 2020 to March 2021. During this period there were 32 new schemes, exceeding the long-term average of 25.
It is interesting to note however that for the second time in consecutive Deloitte London Office Crane surveys a majority of 56% of new starts were office refurbishments which involved extensive upgrades to existing office space in 21 separate schemes. In fact the shift towards refurbishments is gaining momentum in the market, with several owners now opting to retrofit and reuse existing space instead of demolishing it.
The Second Hand London Office Space Market
Over the past 12 months the availability of central London office space has increased considerably. This is the highest it’s been in more than a decade. The survey attributes this to a 50% year on year increase in second hand office availability. Therefore the oversupply of poorer quality office workspace highlighted in the 2020 Crane survey has been exacerbated over the last 12 months and as a result there is even more need for landlords to look at fitting out their buildings and workspaces with a view to improving their existing office stock.
It’s clear from the Crane latest survey that building owners have looked to transform their outdated office space which into space which is of a higher quality and with improved sustainability at the heart of their office refurbishments. No doubt incentivised by the need to stand out from the crowd and to meet the demands of occupiers demand for office space which is now even more discerning given the office space available to them that’s now on the market.
Home Working Has Impacted London Office Demand
The pandemic and home working have also impacted London office demand. Many businesses have understandably decided to adopt a “wait and see” approach before deciding on whether to commit to leasing new office space. With the changing rules and the introduction of home working many businesses are reviewing their office space needs.
In looking to the future the survey says that the need for greater workplace agility and hybrid working spaces is likely to cause a reduction in the office space required in the future. However based on feedback from developers this reduction will probably be very modest. It goes onto say that the majority of developers believe that any reduction in the need for offices is expected to be offset by a growing demand for office space that can provide lower density occupation, less hot desking and more collaborative space which in turn will require larger offices to accommodate staff which will meet these needs.
When it comes to hybrid working spaces there will be a requirement for adaptability. Office space will need to be able to adapt to changing circumstances and this can only be achieved through larger spaces and more flexible partitioning, multipurpose screen dividers which can offer flexibility e.g. living walls and plant wall dividers, storage walls and modular and multifunctional office furniture. Technology will also play a vital role in accommodating hybrid working by incorporating the appropriate technology into the office design.
Office Refurbishments In London Play A Major Role
Clearly, and despite the pandemic, office refurbishment looks like it will continue to play a major role in office space across London. The need for quality office design and development is ever more important in a market where second hand office space is continuing to grow. It’s therefore vital that building owners make sure that their offices are well designed, covid-19 secure, allow hybrid working and ensure staff health and well-being.
How Can JBH Refurbishments Help?
JBH Refurbishments have over 30 years experience in London office refurbishment, office planning, design and build. From your brief, to putting together a project plan, to developing your office design and layout to delivering your office fit out JBH Refurbishments will provide piece of mind. To find out how we can help us via our contact form or by calling us on 0333 207 0339.