London office construction is at its slowest pace for more than 20 years as the economic slump and a dearth of credit deters developers, Drivers Jonas Deloitte said.
A total of 2.7 million square feet (251,000 square meters) of space is currently being built in 22 projects in central London, 68 percent less than a year earlier, the London-based real estate adviser said in its semi-annual survey. That’s the least since the survey was started more than two decades ago, Drivers Jonas Deloitte said.
Of the projects under way, 1.26 million square feet is in the City of London financial district and 667,000 square feet in the West End, home to the world’s most expensive offices. The lack of development will result in rents surging 25 percent in the City of London and 21 percent in the West End through 2010, the report said. That may in turn spur new construction that could outpace demand for space, Drivers Jonas Deloitte said.
Developers including Land Securities Group Plc and British Land Co. are restarting work on central London projects that were put on hold in 2008 as the global financial crisis unfolded.
“We are approaching a tipping point in the City office market recovery,” the report said. “Without a strong economy driving healthy demand, there is a real danger that the market swings from too little new space today to too much in 2014/2015.”