It has not been the best of years for real-estate investment trusts (Reits), but there have been varying fortunes within the sector. Nearly all constituents were badly hit by the Brexit vote, but as the dust began to settle, two things became clear. The exit process will take years, and in the meantime there remains a restricted supply of new office space in London where most Reits operate, a situation that will become more acute as property companies wind down or delay their development plans.
Total office construction across London is at an eight-year high, with 14.8m sq ft under evelopment, but the underlying picture tells a different story. The construction period on a number of schemes has been extended, so that nearly 1m sq ft of space due for completion by the end of the third quarter of 2016 was still in progress at the end of it.
And, according to consultancy Deloitte’s crane survey, the 51 new office developments adding 4.8m sq ft identified in the summer 2016 survey had shrunk to 40 developments, adding 2.8m sq ft, by the winter report.