COMMERCIAL
Growing optimism among developers is bringing dormant projects back to life
London relies heavily on its office sector, which is reported to have seen a 12% decline through the winter of 2024. However, during Q1 2025, we have seen early signs of increasing confidence in the developer-led commercial office market. Several schemes that have been in hibernation for much of 2024 are now being brought back to life, with some developers now feeling more confident to press ahead with speculative development.
Quality schemes which have reached practical completion over the past two quarters have been letting well with few voids. Rental rates for prime space are reported to be rising strongly. If this trend continues, it should lead to the unlocking of many dormant projects as viability and confidence improve.
A survey of developers indicated that there remains an overarching positive sentiment towards sustained growth in the development pipeline. Developers’ optimism is high as 92% and said their development pipeline will increase or stay the same in the next six months. The proportion of developers expecting a reduction in their pipeline is markedly less than two years ago (55% versus 8%).
We have seen an increase in the number of commissions that are primarily focused on the improvement of energy efficiency through the replacement of main plant and equipment together with improvements in fabric insulation. These projects are driven by the need to secure asset value by keeping pace with sustainability policy rather than improvements in the overall physical tenant space.
The commercial office sector remains busy with main contractors continuing to be selective in tendering due to capacity constraints and risk profiles. Main contractors continue to have a key influence in determining procurement strategies because of their aversions to riskier projects and contractual conditions. We have seen more clients considering the opportunity to negotiate directly with a single contractor in order to secure a Tier 1 team.
LONDON, UK
TBC.London
RLB’s cost management experts played a central role in the transformation of a 1990s building on the south bank of the River Thames into one of London’s first net zero operational carbon workspaces. TBC.London, which overlooks Tower Bridge, is an exemplar project that demonstrates the highest levels of sustainable construction and energy efficiency.
