Office Fit Out Growth In 2023 - Promising Signs
London has seen a record volume of office refurbishment starts this year, according to Deloitte’s Summer 2023 London Office Crane Survey.
As it stands there are 37 large scale refurbishment starts in 2023, the most since the numbers started being recorded in 2005.
Sophie Allan, director in real assets advisory at Deloitte, said: “Developers seem to be cautiously optimistic about the future of London’s development pipeline.
“Positive signs include a huge increase in the volume of new starts compared to the previous survey, and the highest volume of refurbishment starts on record, as developers race to avoid obsolescence.
“New infrastructure and expanding transport links have attracted people to previously overlooked areas like mid-town and the eastern fringes of the City.
“This is undoubtedly a vote of confidence in London after the intense disruption of the pandemic, disturbance to supply chains and rising inflation experienced over the past year.”
Increased refurbishments have been driven by a need to reach the anticipated Minimum Energy Efficiency Standard (MEES) regulations to achieve Energy Performance Certificate (EPC) B rating by 2030.
Margaret Doyle, chief insights officer for financial services and real estate at Deloitte, said: “Following pandemic-induced home working mandates, many businesses are now encouraging office attendance more proactively and are considering how to attract employees back to the office. Tenants’ shift toward quality over quantity has led to desire for attractive, sustainable, well-kitted out space, close to transport hubs and amenities.
“We expect that the need to bring offices up to scratch – especially in terms of energy efficiency – will drive London’s development for the rest of the decade.”
“Whilst construction levels remain high, developers are acutely aware of elevated construction costs, which remains the biggest challenge, with both labour shortages and material seen as major drivers.”
Similarly, respondents to Deloitte’s latest CFO Survey cited persistent labour shortages as one of the top risks to business.
However, they expect this to improve over time, with a marginal improvement over the next 12 months and the elimination of significant or severe recruitment difficulties in two years’ time.
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