The boss of GPE, formerly known as Great Portland Estates, has warned that London’s office leasing rebound could hit a wall as inflation shrinks the appetite for new developments.
The capital’s post-pandemic recovery for offices has seen some of the UK’s largest developers – as well as GPE – hail record leasing activity and surging demand.
However, chief executive Toby Courtauld said today that “we expect weaker sentiment and cost inflation in the short term, along with further tightening in the planning environment, to impact the appetite for development risk, choking off the supply of new office space, intensifying the already acute shortage as customers continue their flight to quality.”
In a statement, Courtauld further cautioned that geopolitical and economic uncertainties will dampen growth in the near term, but that the market is looking rosy for now.
“London is substantially busier than this time last year with office workers and shoppers returning, Crossrail is about to open, job vacancies are rising and inward investment into income yielding real estate is up,” he said.
The FTSE 250 property developer and investment firm’s portfolio valuation has grown over six per cent in the year to 31 March, with its office and retail book increasing nearly eight per cent in value.
Developments are also up nearly 50 per cent, as the London-headquartered firm looks to take advantage of the upward swing in the leasing market.
GPE reported a record leasing year for 2021, after unlocking some £38.5m of new annual rent across London. The firm has also inked 22 deals in central London over the 12-month period, as workers flocked back to the city after a pandemic-induced exodus.