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years of London’s tall building boom

increase in tower shell and core costs since 2020

upper range of 2026 office tower shell and core costs £/m²

typical net to gross efficiency for London office towers

HISTORICALLY

After a 25-year tall buildings boom in London – where next?

For almost 300 years, St Paul’s Cathedral defined London’s skyline, symbolising a city reluctant to grow upwards. That restraint ended around the turn of the century, when financial-sector growth and a strategic stance in favour of tall buildings in the mayor’s London Plan provided the catalyst for high-rise development in the UK’s capital.

The City of London was also responding to the emergence of Canary Wharf, a new business district of skyscrapers created out of its historic dockland that was offering relatively efficient buildings with faster routes through the town planning process.

The high-rise typology in the city of London has developed significantly over the last twenty-five years, offering a global case study of how tall buildings have progressed to meet the challenges of politics, economics, regulation and climate change. London’s tall buildings do all the things that are required of them during the earlier waves of the last quarter century, and more.

The graph above illustrates the growth in the number of buildings over 100 metres constructed over time, along with projections for those expected in the coming years.

VIABILITY

Unlocking viability

After a period of economic and geopolitical shocks that have put appraisals under severe pressure, the onus is now on unlocking viability. There are investors willing to commit to London – keen to show the economic case can work. There is pent-up demand for the high quality, sustainable and flexible space that state-of-the-art towers can provide.

Towers must offer something meaningful to the architecture of the city, as well as even more for their occupiers at a time of heightened construction costs and a difficult funding environment. They have to be as sustainable as possible, delivered fast but safely, and designed and built to the highest quality, in form, materials and details.

Development has taken place not just in the Square Mile but in various locations across Greater London, strengthening the polycentric nature of the capital. Each of these centres of densification has a different value and cost profile, but the principles of tall building economics apply to all.

TRENDS SHAPING THE HIGH-RISE MARKET

Supply trails demand

The shocks and uncertainties of recent years have resulted in a period of under-supply of new office space in the capital.

Demand for high quality, sustainable space is not being met as developers have slowed and stalled major schemes, even those with planning consent. Some consented schemes are being reviewed and revised to improve cost efficiency, reduce carbon and make them more marketable.

Changing contractor pool

Confidence is just beginning to return, with some large investors using their ability to take a longer-term view and get their towers into a favourable letting market.

The supply chain for major London schemes has faced difficult trading conditions for an extended period following Brexit and then a series of geopolitical events and supply shocks, with uncertain pipelines. This has led to some high-profile administrations, a shrinking Tier 1 Main Contractor pool, and contractors/sub-contractors becoming more risk averse. Some contractors have shifted focus to other sectors, such as data centres, that provide a more secure income stream.

Now as the pipeline improves again, this is putting pressure on a constrained supply chain and therefore prices.

Refined procurement approaches

Procurement will follow one of two routes: a two-stage design and build contract (the predominant strategy); or construction management, which is less common now due to international investors’ needs for a single fixed price and warranty.

Each has pros and cons, and developers are increasingly looking to incorporate the best of both into a refined strategy, involving earlier engagement with a main contractor and key trades to optimise and get buy-in to schedules, logistics, methodologies and costs, with larger parts of projects procured separately as advance packages.

The principles of the well-received Private Sector Construction Playbook are also increasingly being adopted.

Regulatory pressure on tall residential

A series of enhanced regulations over the last five years has added time and costs to residential projects. These have been numerous and various, covering the requirement for more dual aspect apartments, increased ventilation, the conservation of fuel and power, extended sprinkler provision, protected escape routes and more.

The Building Safety Act has introduced tighter oversight from the new Building Safety Regulator, with earlier and more design and construction planning required to be approved at different gateways.

All this has combined to slow down high-rise residential development, but there is a move towards an easing of regulatory constraints to encourage a return of investment in the housing market.

Sustainability remains critical

Sustainability and carbon reduction remain key priorities across the industry, driving building designs that emphasise high energy efficiency, the use of low-carbon materials, and efficient structural and MEP designs.

The first and most fundamental challenge for any new tall building proposal in London is to demonstrate that demolition is necessary, meaning that teams have to assess the financial and carbon merits of refurbishment versus redevelopment.

Alternatively, some developers are looking to pursue the adaptive re-use route, refurbishing, remodelling and adding to existing buildings in a way that brings to market a good quality product relatively quickly.

LONDON

Projects shaping the skyline

22 Bishopsgate

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18 Blackfriars

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8 Bishopsgate

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99 Bishopsgate

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INFLATION

Construction cost landscape

The cost of shell and core construction for towers in Central London has risen significantly in recent years. While inflation may seem like the obvious culprit, the reality is more complex.

A mix of differentiated value and commercial efficiency is now needed more than ever, demonstrated by comparing London commercial tall building costs between 2020 and 2025. The average shell and core cost of a tower has increased by up to 40 percent or more significantly over the last five years.

increase in avg. cost of shell & core for a tower over 5 years.

CHALLENGE

Perfect storm

The dial has turned over a short period, due to an almost perfect storm of events and trends, from COVID-19 and war to regulatory changes, a challenging financing environment, and a drive for higher quality.

Year	ft2	m2
2020	£350 – 400/ft²	£3,800 - 4,300/m²
2025	£480 – 600/ft²	£5,200 – 6,500/m²

SECTORS

London’s 2025 key cost and efficiency ranges by sector

	Offices (20-60 storeys)*	Residential (20-60 storeys)*	Prime residential fit out range
GIA shell and core	£480 – 600/ft²	£340 – 400/ft²	£185 – 300/ft²
GIA shell and core	£5,150 – 6,500/m²	£3,700 – 4,300/m²	£2,000 – 3,300/m²
% net-to-gross internal area efficiency	63 – 66%	67 – 71%

*Costs exclude finishes, demolition, external works and utilities. Current day with construction inflation included.

FUTURE OUTLOOK

Balancing value and cost

London stands out for having rapidly progressed through four distinct but overlapping waves of high-rise construction over just three decades, driven by differing typologies and learning important lessons along the way.

Looking to the future, it is moving through its fifth wave where’s there a deep focus on value. High-quality towers for occupiers are being realised against a challenging economic backdrop.

This timeline is easiest to see in the UK capital’s office buildings, but the trajectory is reflected across many use classes in the city.

We will need to build on some of the best examples from recent years, where we have created successful buildings efficiently, marrying ‘delight’ in design with commercial effectiveness.

The fundamental metric for commercial success remains the value:cost relationship. It is increasingly vital for clients in London to combine expert insight with sector-leading data to find the right balance for their projects.

London’s tall building waves

Making a splash

The first wave of tall buildings such as Salesforce Tower and The Shard brought landmark towers that showed how height could play a positive architectural role in the London skyline, setting the foundations for marrying of height and heritage

A focus on financials

Next came a move away from exuberance towards more efficient building forms such as 22 Bishopsgate – channelling investment into enhanced amenities and infrastructure to provide more for occupiers.

Embracing sustainability

Buildings such as The Dovetail Building, long in a development, prioritised reductions in both embodied and operational carbon, and are looking at specific initiatives to improve the health and wellbeing of building users.

Opening up to the community

Increasing the scale and mix of amenities in towers to stand out in a competitive market – looking beyond occupiers, opening up lower levels, and blurring private/public boundaries with community uses and viewing galleries. This helps tall buildings to become part of the local area and embraced for their benefits, with 99 Bishopsgate a good example.

Doing more with less

The latest phase is a response to a complex global construction environment – with higher costs, constrained finance, and greater risk profiles. Tall buildings are seen as a necessity for urban growth, and expectations of quality, beauty, sustainability and social impact remain high, while projects must ultimately also be viable for investors.