Office construction in London falls 9% amid Brexit anxiety

18 December 2017

New office space under construction in the UK capital has fallen by 9% over the previous six months, according to a new survey. New builds in London are 21% fewer than last year, refurbishments are up significantly – reflecting an increased developer caution amid continued uncertainty surrounding Brexit.

The spectre of Brexit has, for sometime, created concerns around the future viability of London as a significant location for firms. While real estate in the city saw record levels as the Pound fell dramatically earlier in the year, financial services continue to mull their exit strategies to maintain ties with the EU, meaning as many as 75,000 jobs could make their way out of the financial hub by 2019.

Housing key firms, particularly in the financial services sector, has bolstered crane activity in the region for a number of years. However, due to this uncertainty, activity has drastically cooled over recent years. In a new survey from Deloitte, the professional services firm has looked into the current numbers for office construction related activity in central London.Central London office construction

The total volume in central London has dipped slightly on the previous quarter, falling 9% to 12.6 million square feet. However, compared to the same quarter in 2016, activity is up somewhat. When considering the long-term trend, meanwhile, activity is up considerably – the trend stood at around 10 million square feet since 2002.

However, the firm adds that the number of new starts has fallen by more than 50% of Q1 2016, to 25 new starts in the latest survey. The volume of new starts is also relatively low, at 1.8 million square feet or 21% below the market average; an additional indication of a possible slowdown in the market.

Central London building refurbishment

Interestingly, while new starts have tumbled, the number of refurbishments has climbed to 70% of the total, a switch from 81% new starts and 19% refurbishments, recorded in Q1 2017. The refurbishments are largely concentrated in sixteen schemes, although, given the relatively large number of refurbishments, even against a low number of new starts, total volume per refurbishment has declined from 97,000 square feet long-term average to 73,000 square feet.

The volume was split across much of the city, with the City itself continuing to see the highest total volume relative to total activity, at 7.3 million square feet. Midtown followed, picking up 1.6 million square feet in construction volume, followed by the East end at 1.4 million.

Central London under construction

The research notes a number of changes to the total office space under construction since the previous survey, particularly in the city, where total let space square feet fell by 24% to 2.7 million, while total available space fell 2% to 4.5 million square feet. The West end saw a number of recent finishes, significantly boost let square feet, which was up by 45%, while available square feet grew by 8%.

While other areas, such as South Bank saw significant increases, let space exploded by 217%, on average, total square feet of office under construction fell by 9%, with total let square feet decreasing by 6% and available square feet fell by 11%.  Kings Cross and Paddington saw considerable declines in total office space under construction, at 64% and 35% respectively.Total office space under constructionFinancial services firms remain the dominant players when it comes to pre-completion space letting, at around 45% of the total. Corporate offices come in second, at around 24% of total in the latest survey, almost doubling from six months earlier, driven, in part, by increased co-working space demand.

Legal professional services and TMT follow, at 10%, 9% and 7% respectively. TMT, in particular, saw considerable declines over the past six months, as strategy shifted away from pre-letting, and new completed buildings were taken up.Pre-completion space let.

Commenting on the latest trends, “Construction is down and this is largely as a result of the high volume of schemes recently completed and delivered to market. We’ve recorded 2.9 million sq ft complete in this survey and, with further completions imminent, 2017 is set to deliver 7.1 million sq ft of office space, the highest volume for 13 years. Despite ongoing uncertainty, occupier demand for new space has remained resilient as 44% of space under construction is already let.”


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Ensuring data quality imperative for smart asset management

25 March 2019

By implementing innovative Asset Performance Management systems, utilities firms can maximise their utilisation of assets and minimise maintenance costs across their portfolio. However, according to Louis Morgan of Smart Grid Forums, without securing quality management systems for the data which smart grids rely upon, companies risk missing out on the benefits of asset performance grids.

Smart asset management presents a major opportunity to professionals across the business spectrum. In this context, a new event hosted in London is looking to help smart-grid asset management professionals meet the needs of a changing energy industry with digital asset management. The first annual Grid Asset Management event is due to take place between the 14-16th of May 2019 at the Millennium Hotel in Knightsbridge, London.

The conference will bring together leaders and experts from across Europe, in order to benchmark their digitalisation roadmaps. In a piece posted on the Smart Grid Forums website ahead of the event, Louis Morgan, a Conference Producer at Smart Grid Forums, has outlined the importance of investing in innovative asset performance technology for utilities firms, which can help ensure long-term stability for assets management in the utility sector in the face of increased complexity  .

Ensuring data quality imperative for smart asset management

Traditionally, the decision to invest in a given asset was made on the basis of an expert’s judgement of the risks posed by its failure, having typically been assessed via a risk matrix or a similar qualitative method. After that, a decision would be taken as to whether it should be replaced. However, according to Morgan, as the pace of change and complexity increases, these methods can no longer provide the required level of certainty. Uncertainty about changes to consumption patterns and load profiles brought on by the energy transition produces a vast number of possible scenarios that investment planners must consider.

As a result, Morgan explained, “utilities are seeking to support their investment decisions with quantitative risk management methods, centralising expertise from across their operations into a consistent, numerical framework that accurately captures the risk posed by all kinds of asset failure to all stakeholders.”

Companies are doing this by turning to ‘smart grid’ utility management, or systems which work to invest in the maintenance and replacement of millions of assets spread across thousands of kilometres of network. However, this is by no means a silver bullet, and in the age of the smart grid, planning ahead is more complex than ever. To ensure the long-term stability of their grids, then, utilities must deploy standardised investment decision-making practises supported by advanced modelling capabilities.

Morgan elaborated that the best way of facing this problem is through the combination of condition, utilisation, reliability and demand data. In that case, risks can be quantified in financial terms and investment budgets can target the assets posing the highest total risk, thus deferring investment in lower risk assets and optimizing the long-term budget. However, decisions informed by these risk models “will only be as good as the data and the assumptions that support them”, meaning utilities must therefore find ways to improve the volume, variety, veracity and velocity of the data they employ in their investment planning models.

“This means digitalizing asset operations, rolling out sensors and implementing systems that integrate data from a range of internal and external sources in real-time,” Morgan expanded. “Utilities must also scour their business for expertise about different assets to ensure that their risk management frameworks accurately capture the true risks posed by asset failures.”

This is in keeping with a trend which goes well beyond utilities. Business leaders of all shapes and sizes are currently having to address how they manage data quality – as poor information being input into any automated system can essentially negate the efficiencies such systems bring to the table. To this end, robust data governance is critical.

Concluding his article, Morgan said, “It is clear that there is a great deal of opportunity for utilities to obtain significant business benefits from improving their investment planning capabilities. More accurate risk management, supported by a reliable data-driven method, will deliver better financial outcomes from investment activity... But to achieve these capabilities, a lot of work must be put in to establish the systems, processes and frameworks which underlie them. Utilities must also make difficult choices about how they quantify risk and the appropriate range of data to feed into their investment planning models.”

This topic will be tackled in-depth at this year’s Grid Asset Management 2019, a conference, exhibition and networking forum aimed solely at smart grid asset management professionals.