David Cameron may not be a fan – last summer he called its creation a “policy failure of historic proportions” – but London agents may soon have reasons to be thankful for the Financial Services Authority.
Despite it teetering on the brink of abolition, Estates Gazette understands that the FSA is set to launch the single biggest office requirement in London’s financial district this year (page 49).
The move is a direct result of its demise – sorry, restructuring – and the ending of the tripartite system created by Gordon Brown and so loathed by Cameron and George Osborne. To their minds, the very division of regulatory responsibility between the FSA, Treasury and Bank of England helped cause the crash.
Whether the new arrangement – with the FSA essentially a subsidiary of the Bank of England – will offer additional security is a debate for another day. But this government believes that it will, and it is pinning its hopes on splitting the FSA into a Prudential Regulatory Authority and a Consumer Protection and Markets Authority. The PRA will be a subsidiary of the Bank, and the CPMA a “powerful” independent authority.
That structure may be two years away. But, looking today from a property perspective, the upshot is that the likely search – 500,000 sq ft in Canary Wharf is mooted – will provide a welcome fillip for the London office market.
And with JP Morgan thought to be shying away from a move to a new HQ at Canary Wharf’s Riverside South in favour of the City, it is a potential shot in the arm for the Wharf itself too.
Cynics will ask why a discredited regulator is considering taking additional space in a time of austere public-sector spending cuts, but the agent appointed, should a search materialise, will not waste too much time worrying about that.
So putting the issue of public-sector prudence to one side, it’s a rare piece of good news. With next month’s government spending review only expected to deliver dampening news, it’s hard to see where demand for additional office space is going to come from – even in London.
Rather than growth, London’s financial services sector saw an 8% decline in job opportunities over July and August, recruitment consultant Morgan McKinley said this week.
The summer is, of course, traditionally slow, and it shouldn’t be forgotten that the number of available jobs is up by 33% on a year ago. Nevertheless, it’s an unwelcome reminder that few occupiers are immune to the macro-economic challenges we face, including – and perhaps especially – some of the very largest.
The figures for September will be more revealing, and will provide a stern test of the fragility of the recovery.
The first month of autumn normally sees greater recruitment activity than the summer. More than that, the numbers will be read as an indicator of how hiring will fare over the rest of 2010.
In turn, that will provide a lead indicator to how demand for new, additional office space may pan out in the months ahead.
In the meantime, celebrate the irony that it’s a financial services regulator – rather than the financial industry itself – cheering the market.
damian.wild@estatesgazette.com
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