Featured Sector: Offices

UK office development has been on a firm growth trend over the last three years, with a 12% rise in the value of underlying project starts in 2013 following a 39% rise in 2012. While growth has eased slightly to around 8% in 2014, prospects remain buoyant and we expect growth to accelerate in 2015.

However it is the early stage demolition and site preparation specialists who are likely to have enjoyed 2014 the most, with activity expected to ramp up in 2015 as projects’ on-site work hit their peak. We expect a expansion in project starts over 2014 as a whole; however this forecast to be more modest than the 12% expansion in starts seen in 2013 and will remain well behind the 39% rate seen in 2012 when the sector bounced back from a particularly low base.

Last year London saw somewhat of a pause, the value of underlying starts rose by 4%, behind the UK average of 12% with the Scottish cities the star performers. Improving business activity is fuelling growth in the South East and other large English cities, but a raft of high profile schemes are set to lift sector activity in London over the next few years, dramatically altering its skyline in the process.

Of these ‘The Scalpel’ started on site in the summer of 2014, with a London Wall scheme due to start in spring 2015. The development pipeline includes a number of other consented schemes with construction values in excess of £100m awaiting final investment decisions, pre-let tenants, or cost-saving redesign in the case of ‘The Pinnacle’. No such austerity drive is in place for Google’s King’s Cross headquarters, however plans for a more ambitious redesign mean that we do not foresee a start to construction until at least 2016.