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. A surge of starts in the third quarter of 2014 lifted growth for the year above our earlier expectations to a rise of 20%. Prospects remain buoyant and we expect further expansion in 2015.

It is the early stage demolition and site preparation specialists who are likely to have enjoyed 2014 the most. The rise in activity is expected to spread to main contractors and other specialists during the current year as work on projects’ on-site gather momentum.

In 2013 London saw a pause in the rise project starts; the value of underlying starts rose by 4% behind the UK average of 12% with the Scottish cities the star performers. Indeed last year saw improving business activity fuelling growth in the South East and other large English cities.

However a raft of high profile schemes supported a further upturn in sector activity in London last year, including ‘The Scalpel’ where work started on site last summer.

Whilst recent month have seen a pre-general election dip in project starts, the flow schemes is forecast to strengthen during the second half of the year. The development pipeline includes a number of other major consented schemes with construction values in excess of £100m awaiting final investment decisions, pre-let tenants, or a cost-saving redesign in the case of ‘The Pinnacle’.

In addition sector activity should remain firm over the medium term. Google’s King’s Cross headquarters is one of the high profile projects that is currently delayed, in this case due to a more ambitious redesign which means work is now unlikely to start on site until 2016 at the earliest The new owners of Canary Wharf have also underlined their commitment to push forward with the long term £3 billion development programme for the Isle of Dogs.