PROPERTYdevelopment
Some of these buildings won’t be
delivered for years, the Walkie Talkie, scheduled for 2011 completion, won’t now come onstream till 2014. Next year only two major developments will complete, Heron Tower and the Cannon Street redevelopment. In 2012, only one major scheme will be delivered. So, Peter Damesick says, there’s no overhang of space. “Indeed we can see shortages of high quality space over the next couple of years.” Right now, Grade A space is already
scarce. Office availability peaked in the third quarter of 2009, since when it’s been on a downward trend, and is lower than in almost any other major financial centre. Availability of larger floorspaces is particularly constrained. That has already led to an increase in
rental levels. James Gillett, Director of City Offices at NB Real Estate, says rents have already risen 25 percent this year, as supply has dwindled and vacancy rates have increased. Prospective tenants are even getting involved in bidding wars where Grade A space is concerned. Still, London’s past is littered with tall buildings that were commercial failures. One Canada Square, the centrepiece of Canary Wharf, was completed in a recession, and took 11 years till it was fully let. Centre Point is another tower that was, for years, a white elephant. However the circumstances are different.
Peter Damesick says Centre Point “wouldn’t be regarded as ‘tall’ in any city except London”, and suffered from its small floorplate. With less than 6,000 square feet
Cheesegrater It’s sharp, it’s exciting
and it is very much a star building, not a cooking utensil.
Come 2016 London won’t have the tallest building in Europe; Moscow’s Federation Tower East will beat it.’
a floor, it was never really suitable as a corporate building, and should have been marketed to smaller firms instead. Now that it’s been rebranded as exactly that type of space, it’s doing quite well. As for Canary Wharf, its arrival
The Pinnacle Is this the height of the developer’s
dreams for the 21st Century? 36 JANUARY 2011 PROPERTYdrum
coincided not only with a major recession, but with a dramatic fall in the property market after a huge amount of speculative space had been built in the 1980s. This time round, developers have been much more cautious, developing on a prelet basis, partly because banks remained unwilling to lend to purely speculative schemes (preferring to save their money for a far more speculative housing market, the cynic might say). Completions peaked in 2009, Peter Damesick says, and will fall this year, no new schemes have been started since early 2008, “and we’re looking out from here at a really rather sparse pipeline of new building.”
So is it different this time? The Gherkin
was 50 per cent pre-let but because it hit the market at the wrong moment, it struggled to fill the space. Heron Tower might do well; it’s found a small, profitable window, with high rents and short supply. Other developments might not be in that desirable position. If all the other towers come onstream in 2014, they might find a glut of office space pushing rents down. Even given this rash of tall buildings,
London won’t have the highest building in Europe. Federation Tower East, Moscow, will easily beat anything in London when it’s completed in 2016. The Shard’s 310 metres will be dwarfed by that building’s 506 metre bulk. But at least London will stand tallest until then, and importantly in the showcase Olympic year, 2012.
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