Daily Management Review

Brexit vacates office space in London


05/18/2017


Deloitte Real Estate reports that the percentage of vacant office space in central London has risen sharply over the past year. According to experts, this was facilitated, on the one hand, by the large volume of construction of new office buildings in the last year and a half, and on the other hand by outflow of investors after the referendum on the withdrawal of Britain from the European Union.



A P Monblat
A P Monblat
362.3 thousand sq. m. of office space were commissioned in central London despite general reduction in construction volumes over the past six months. This is the highest figure for the last 13 years. These data are given in the London Office Crane Survey, published by Deloitte Real Estate. In addition, London developers launched 28 new office projects over the past six months, which will add another 297.3 thousand square meters of office space to the British capital (13% more than in the previous six months). In total, there are 1.3 million square meters of office space are in the process of construction in London now, which is 6% less than in the previous six months.

Experts of Deloitte Real Estate note, that this growth to a large extent is explained by launch of large-scale construction projects a year and a half ago. Now these projects are being completed and the office areas are beginning to be put into operation". 408.8 thousand square meters of office space were commissioned in 2016 in total, and these rates will persist in 2017, - noted the paper’s author Shaun Dawson. - We expect that in general for 2017 the volume of the commissioned space will reach a record of 2003". 

Besides, there is another reason for such an optimistic rate. According to the study, amount of available office space in London in 2016 grew by 36%, and in the first quarter of 2017 - by 19%. This can be explained by the fact that companies move from large offices to smaller premises or even transfer their office to another city or country for optimization purposes. For example, UBS last year released several of their office buildings, moving to a new one. The volume of unoccupied space in the secondary market of office real estate is growing, and because of this, the share of unsold space by the end of the first quarter increased from 3.9% to 5.8%. This is the biggest increase since 2009.

Deloitte Real Estate notes that of 362.3 thousand square meters in the process of construction, 43% have already been rented. Financial companies are the most active tenants – their share reach 46% (which is 4% more than in the previous six months). Technological, telecommunication companies and mass media take 21%, having reduced their share from 33%.

source: reuters.com






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