The Victoria office market has been dealt a severe blow by Gordon Brown’s Budget announcement that in excess of 20,000 civil servants could be relocated to the regions.
Brown said that he had asked Sir Michael Lyons, director of the Institute of Local Government Studies at Birmingham University, to examine the economic benefits of relocating civil servants from London – many of whom are located in Victoria – to cities across the UK.
Some 4m sq ft of development over the next three years has been planned for Victoria by some of the UK’s best-known developers, including Land Securities, Grosvenor and HRO, on the basis that demand would come from the public sector.
Land Securities’ 600,000 sq ft Stag Place is the biggest of the Victoria schemes planned in the next few years.
Robert Heskett, LandSec’s head of London Portfolio Management, said: “It is too early to say what effect this initiative will have on government demand for office space in central London. Most of our buildings are located in core positions where government wishes to be housed, and we expect this core demand to remain.”
A source close to the Office of Government Commerce said: “One of the drivers for this has been the comparative increase in rental values in Victoria, which have more than doubled in the last seven years, and Westminster. But it could prove more costly to try to dispose of the surplus space left on the London estate.”
