London is booming. We must allow it to fulfil its true potential
16 May 2014 1:45am
WE all know that London emerged from the crisis remarkably unscathed. But few realise just how well our great city has performed over the past 15 years, and how we have grown faster than almost all comparable metropolises since the recession.
In 1997, London boasted 1.59m employee jobs in office-based sectors. Today, the number is about 2.2m, a rise of around 38 per cent, which helps to explain why all of the shiny new office towers we see all over the capital are filling up so fast.
Central London has driven the bulk of the growth, though outer London boroughs have also progressed slightly. Remarkably, since 2008, office-based employee jobs are up an astonishing 13.3 per cent in central London.
The figures come from a presentation by Neil Blake, head of UK and EMEA research at CBRE, the property consultants. They make for astonishing reading. In terms of total employment growth in percentage terms since 2009, only one major European city has done better than us, and then only very marginally: Berlin, home of a thriving tech start-up culture. Paris, Amsterdam, Milan and Madrid have performed awfully, shedding jobs; and we have done much better than Frankfurt, Warsaw or Stockholm.
Not too surprising, I hear you say: Europe is in decline, so it is no wonder we have outperformed that stagnant, over-regulated and outdated continent. What about London’s real competitors in the 21st century, which can be found all over the world, including the emerging markets?
That is where the findings of the CBRE study become truly astonishing. Sure, the best performers when it comes to total employment growth between 2009-13 were Singapore, followed by Beijing (they grew by between 17-19 per cent). Next came Shanghai, up by close to 12 per cent. But London was ranked fifth (up around eight per cent), beating among others Sao Paulo, Hong Kong, Sydney, Seoul, Mexico City, Washington, DC, New York and Tokyo. San Francisco, LA and Chicago actually lost jobs during the period.
Central London alone now hosts 1.35m or so office-based employee jobs, according to CBRE. It expects that number to hit 2m by 2036, which would be equivalent to growth of 50 per cent, with the greatest increase coming from business services, followed by technology, media and telecommunications, insurance and fund management, and law and accountancy. It is impossible to know whether such growth will materialise, of course, or whether other sectors would emerge to help fuel this employment boom, but it is clear that London is on a roll. It has emerged as the world’s leading city for high value added service sector jobs, its population is booming, bolstered by migrants from the rest of the UK and from the EU, and it is sucking up global capital.
Cities can fall as well as rise, with Detroit a poignant case study in the former, and London could easily fall back, especially if it turns its back on globalisation, free markets and aspiration. A punitive tax raid on high-earners, a wealth tax or a deterioration in the quality of policing or education would cripple London’s competitiveness and attractiveness. But if we don’t make such mistakes, the CBRE’s forecasts could easily be right. That would mean that over the next 25 years developers would have to build 62m square feet of office space to meet demand (assuming significant efficiency gains), plus another 60m sq feet to offset buildings being demolished or renewed. Far more homes would be needed to house the growing population, and there would need to be more train capacity (with projects such as Crossrail 2), enhanced roads (Boris Johnson’s idea for a massive underground ringroad around central London is interesting), airport expansion (with Heathrow probably the best bet), and so on.
London has proved all of its critics wrong. It must now be allowed to fulfill its true potential.
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