City of London Corporation forecasts a squeeze on office floorspace availability
Planning and Transportation committee releases new City Development Trends Update
The City of London Corporation has recently released the first of its proposed six-monthly updates on development trends in the Square Mile. Summarising recent information taken from its monitoring of planning permissions granted, it looks ahead to developments likely to go ahead in the coming years. Highlighting some schemes and note-worthy trends it provides a general overview of existing market sentiment.
As of June 2015 research suggests that City development is expected to deliver an increase in floorspace to 2026 as specified in the Local Plan. Growth in office, retail and housing schemes under construction or completed since 2011 are major contributors towards meeting targets set under the Local Plan, however to ensure the targets are fully met, further schemes will need to be commenced. It is anticipated that there will be a squeeze on office floorspace availability, which will lead to rental increases which in turn will trigger additional developments.
The total square footage of office floorspace currently under development is at its highest level since 2008 (11,151,000 sq ft) and is anticipated to deliver significant stock increase over the next three years. An additional 4,493,000 sq ft of office floorspace has been approved but as yet development has not commenced. While significant, this is significantly less than the Local Plan target of 8,073,000 sq ft.
The report confirms that good progress is being made in the City development sector but additional schemes will need to be approved and implemented in the years ahead if targets are to be met. Pre-application discussions suggest an increased appetite for additional office development projects in the City.
Over a third (36%) of the City (by area) is either listed (600 buildings) or within a conservation area, much of which has been regenerated and contributed to the maintenance of a range of different types of stock to suit the requirements of tenants.
As for serviced office providers such as Business Environment, the Corporation believes that this sector will continue to differentiate its offerings in terms of style and quality with the emergence of a stronger tiered market. A broader flexible space market is also emerging in addition to serviced offices, with managed ‘co-working’ providers now starting to occupy City office space.
The acceleration of the diversification of the City’s business base will see a step change in how the requirements of new businesses in the Square Mile are accommodated over the coming years.