In its latest programme and cost sentiment survey, the firm noted that the sentiment around occupier demand was “remarkably similar” across the capital, regional offices and industrial and logistics, namely that take-up has fallen slightly but that this has largely been driven by a lack of big deals.
It noted that occupiers are adopting a “wait and see” approach to Brexit before committing to large capital investments, and that this was causing both build costs and timescales to drop as “contractors are able to deliver projects quicker and continue to price orders at a suitable level to fill their order books”.
Simon Collett, head of division at Savills, said that with the UK looking for its third prime minister in four years, there is little in the way of “political clarity” to give developers or occupiers confidence in committing to large-scale projects.
Nonetheless, he added: “Many occupier markets still have remarkably low vacancy rates, so a window of opportunity remains for developers who can look past the politics.”
Elsewhere, the report noted that there is “less appetite for risk” among housebuilders, thanks to a combination of slowing sales rates, rising build costs and the prospect of the Help to Buy scheme ending in March 2023.
Savills noted that housebuilders are “being selective about the sites they buy and are making use of their established land pipelines”.