Commercial office sector index London stalls while the regions benefit

摘要

The CPA/Barbour ABI commercial contracts awards index in December was 6% lower than in November and 35% lower than a year ago. However rather than the uncertainty after the referendum causing the falls, the trend suggests the referendum has exacerbated issues that already existed. Construction activity in central London is at peak levels but there were already concerns from international investors about rising prices and whether the market was topping out. Investor misgivings over new projects have only increased in the last six months, especially over office space aimed primarily at the financial sector. Having said that, demand for new high-profile floorspace for the technology and media sector appears robust. Office construction in cities outside of London continues to thrive, particularly in Manchester, benefiting from strong demand and possible concerns about affordability and demand in central London. The fall in contract awards during 2016 focuses largely on major towers and is likely to take 12-18 months to feed through. Even afterwards, small and medium-sized projects are expected to continue.