Deloitte’s London Office Crane Survey shows deepening development pressures in 2025, with new construction starts falling by 35% year on year to 4.8m sq ft.
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Occupiers continued to prioritise best-in-class space and viability challenges subdued new builds, the survey shows, as new starts fell from 7.5m sq ft in 2024 and 8.7m sq ft in 2023, as well as falling below the five-year average of 6.5m sq ft.
Refurbishments accounted for two thirds of all new starts, around 3.1m sq ft. Refurbishments have now outstripped new development throughout the post-Covid period.
The 2025 survey, which collected data between 1 January and 31 December 2025, shows that 7.1m sq ft of new office space was delivered in central London during the year, up 8% on 2024 and the third-highest annual volume in the survey’s 30-year history.
However, Deloitte said the results pointed to a potential supply gap in the capital from 2027 to 2030. Its regional survey in February painted a similar picture, with a decrease in total volume under construction amid reports of constrained development pipelines for offices.
Deloitte also said that developers were confident about the resilience of demand among occupiers for grade-A office accommodation, with most anticipating that their office pipeline would either ‘increase’ (58%) or ‘remain stable’ (34%) over the next 12 months.
Three quarters (75%) of developers also reported feeling more positive about leasing demand than they did 12 months ago. The report notes that prime rents hit £187/sq ft in the West End, where vacancy sat at just 1%.
Caroline Waldock, partner, real estate sector lead, at Deloitte, said: “London’s office market remains attractive, and the capital continues to attract global investment, talent and businesses. Occupier requirements and demand for best-in-class space is strong and is underpinning record prime rents.
“Larger tenants are facing scarcity, with competition for high-quality assets that are suited to companies’ changing sustainability and technology requirements. However, while developers are confident in their pipeline, there are real delivery constraints, which brings with it a potential future supply gap.”
Philip Parnell, partner and head of real estate valuation at Deloitte, said that developers were “once again facing rising construction costs and financing uncertainty alongside planning complexities”.
He added: “The continued shift to refurbishments goes beyond sustainability requirements and represents challenges around scheme viability, delivery risk and addressing occupiers’ evolving needs around quality and flexibility.”
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