Starters for stock With supply shortages predicted in the medium term, who has the nerve and financial muscle to start building? By Stacey Meadwell
The sound of the screech of brakes as London developers put a hold on development starts was palpable during the recession but, as the smoke from the tyres clears, it shows a market that is once again facing a medium-term supply shortage.
The problems facing developers are well-known: a lack of finance; unviable rents; and building costs that remain pumped up by demand from the 2012 Olympics site.
But with the overhang of space from the last building boom slowly being taken up and development starts at an historic low, the length of time it takes to deliver major central London schemes means that occupiers will have little space to choose from in 2011-12.
Rental growth
It is no surprise that most agents are forecasting rental growth. Knight Frank is predicting 19% in the City this year and a 52% increase over the next four years, and growth of 11.5% in the West End this year.
Against these predictions, agents frequently use the phrase “who dares wins” in reference to those developers that will profit most from the situation.
A developer starting construction this year will be looking at a completion date of 2011-13, depending on the size of the scheme. Those buildings could be entering the market at a time when stock availability is at a level not seen since 1993 and lease negotiations are swinging back in favour of landlords.
So who has the financial muscle and the nerve to push the button?
West End
Eg analyses when key building projects will start
2010
Scheme Park House, 475-497 Oxford Street, W1
Developer Land Securities
Size 170,000 sq ft
Status LandSec says will start development this year
Start on site 2010
2010
Scheme 5 Hanover Square, W1
Developer Mitsui Fudosan and Stanhope
Size 46,000 sq ft
Status Planning granted May 2009. Existing building is empty but no sign of development activity
Start on site 2010 (unconfirmed)
2011
Scheme 8 Baker Street, W1
Developer McAleer & Rushe
Size 125,000 sq ft
Status Spokesperson says: “We cannot confirm a start date”
Start on site 2011 (unconfirmed)
2010
Scheme Selborne House, 54-60 Victoria Street, SW1
Developer Land Securities
Size 250,000 sq ft
Status LandSec has agreed a construction contract for this and three other schemes and will start on site this year with completion in 2013. Colette O’Shea, director of development for LandSec’s London portfolio, says: “To be the first major developer to state publicly that we are starting to deliver such a substantial development programme demonstrates our financial strength and development capabilities, as well as our confidence in the West End market”
Start on site 2010
2010
Scheme Marcol House, 289-293 Regent Street, W1
Developer Great Portland Estates
Size 110,000 sq ft
Status Completion is scheduled for around Q2 2012. A spokesperson says it will be “one of first of major developments to come online in the West End”
Start on site First half of this year
City
EG analyses when key building projects will start
2011
Scheme One Walbrook Square, EC4
Developer Legal & General
Size 900,000 sq ft
Status Legal & General is looking for a development partner and at the possibility of redesigning the scheme, in which case a new planning application would be required. According to reports, Tishman Speyer and Development Securities are interested. Helen Gordon, director of Legal & General Property, says: “As a prime core City site, Walbrook has always attracted significant developer and occupier interest and continues to do so. We are in the process of carefully exploring a number of alternatives for the site. However, to date, no decision has been made”
Start on site 2011 (unconfirmed)
2011
Scheme 20 Fenchurch Street, EC3 (Walkie Talkie)
Developer Land Securities
Size 590,000 sq ft
Status Developer says it is reviewing the plans and deciding on the beststart date
Start on site End of 2010-11 (unconfirmed)
2011
Scheme St Alphage House, 2 Fore Street, EC2
Developer Corporation of London/Hammerson
Size 500,000 sq ft
Status Martin Jepson, managing director of Hammerson’s London Group, says: “Having signed an option agreement for the St Alphage site with the City of London last summer, we have recently appointed Make as our architect. We are still in the early stages of scheme design and are making contact with local stakeholders as part of the consultation process. We anticipate submitting a planning application for the office-led development by the end of the year”
Start on site: 2011 (unconfirmed)
2011
Scheme 122 Leadenhall Street, EC3 (The Cheesegrater)
Developer British Land
Size 600,000 sq ft
Status BL says it has no plans to start speculative development and is seeking alternative uses for the site
Start on site End of 2010-11 (unconfirmed)
2011
Scheme 1 Mitre Square, EC3
Developer Helical Bar
Size 350,000 sq ft
Status Due to submit an application for a smaller scheme of 270,000 sq ft in April. Gerald Kay, development director, says: “We will probably wait for a prelet, but will look to deliver the scheme for the early part of 2013”
Start on site 2011 (unconfirmed)
2011
Scheme Aldgate Place, E1
Developer Tishman Speyer
Size 1m sq ft
Status Planning permission granted in July 2009, but awaiting a prelet
Start on site 2011 (unconfirmed)
2012
Scheme 60-70 St Mary Axe, EC3 (Can of Ham)
Developer Targetfollow
Size 300,000 sq ft
Status Site is still occupied. Developer is thought to be looking for a development partner
Start on site 2012 (unconfirmed)
2010
Scheme The Pinnacle, Bishopsgate, EC2 (Helter Skelter)
Developer Arab Investments
Size 822,000 sq ft
Status Demolition and ground works are ongoing
Start on site End of this year (unconfirmed)
*Start on site dates are estimated from information now unless the developer has given a specific date
