LONDON office space has been the subject of much consternation amongst the financial elite.
The recession caused office construction to grind to a shuddering halt as firms battened down the hatches and waited for the worst to pass.
As the economy shifted into growth, the construction industry lagged behind and office rates crept up. Prime rents rose over the first quarter of this year to £47.00 per square foot in the City and £85.00 per square foot in the West End.
Leasing levels for the quarter were above average for the second successive period, with take-up hitting 4.4m square feet in the three months to April. Banks were the driver behind recent city deals, accounting for 40 per cent of take-up, significantly higher than the long term average of 29 per cent.
Now the demand will lead to a development boom in the City, according to Land Securities. As the construction giant returned back to the black with a £1bn profit, it is preparing to launch a construction drive.
Eight new Skyscrapers are due for completion within two years, including what is soon to be London’s tallest building, the Shard, Heron Tower and the “helter skelter” Pinnacle building (right). And at least ten more have been proposed.
Land Securities has committed itself to four developments totalling 1.2m square feet. Some of these will be built on its own £2.4bn balance sheet. It is also in talks with potential joint venture partners to restart building its “walkie talkie” skyscraper on Fenchurch Street.
The soaring “cheese grater” at Leadenhall market is also back in development. The new projects, to be completed over the next five years, should ease the strain on rental prices and provide enough space to boost the economic recovery.
If concrete proof is needed of the financial recovery in the City then this, literally, is it.