Featured Sector: Offices

Table 1: Offices Construction (£ million)
Underlying value of construction projects starting on site. (Excludes individual projects of more than £100 million and framework agreements).

The scarcity of office construction projects over 2008 and 2009 rivalled the scale of the downturn in private housing construction. However, as housing and other sectors recovered over 2010, office starts continued their downward trend.

Office construction starts have fallen sharply since 2007. The credit crunch restricted access to finance and many developers responded to faltering demand for office space, weakening rental levels and falling capital values by shelving planned projects. Glenigan recorded a 68% drop in the underlying value of project starts between 2007 and 2011; the biggest of any sector across that period.

However, this lack of office construction has constricted the supply of office space, and rising demand is now pushing up rental yields, particularly in central London. As such, Glenigan anticipates a recovery in office starts during the next twelve months.