Office construction in central London is at a four-year high. It is perhaps the clearest sign that the faltering recovery now has real momentum. As long as we don’t expect too much, too soon, we can look forward with confidence.
Not only is 9.7m sq ft of office space now under construction, but letting activity is up on those buildings too, according to Deloitte Real Estate’s latest London office crane survey. That’s an 8% rise in six months and a trebling of activity in three (long) years.
A third of the space is already let – as recently as 2011 the same could only be said of 1%.
There is more construction and more letting in the City, while in the West End 1.6m sq ft of space will complete in 2013, the highest level for seven years. And there is productive hustle and bustle north of Oxford Street and in Victoria, around King’s Cross (which has seen the biggest increase ?in new floorspace), in Midtown and on the ?South Bank.
This rosier picture is further improved by other indicators: there is better regional activity, sentiment surveys among businesses point to improved confidence and the UK continues to punch above its weight internationally.
Just one note of caution: don’t get carried away.
• There is no better place to view the crane survey than in the New London App. The free app is London’s live development map and has been created by Estates Gazette, the NLA, Deloitte Real Estate and the mayor’s office. Featuring 224 projects – a number growing all the time – it is available for download in the App Store.
• It was inevitable perhaps that the issue of Britain in Europe should dominate this week’s BCO conference. The event was in Madrid, after all, and Lord Lamont, chancellor of the exchequer the last time a Conservative-led government tore itself to shreds over EU matters, was among the speakers. Thankfully, the view that Britain was stronger in Europe than outside it seemed to prevail. The other dominant theme was infrastructure. Frustration at politicians’ inability to address the airport debate with the required urgency irked many, not least Crown Estate chairman Sir Stuart Hampson and former Land Securities chair Lord Myners. One-time Labour transport minister Lord Adonis – and, appropros of very little, was this the most titled speaker line-up ever? – attempted to defend politicians, pointing out their need to get elected. But no one – perhaps not even Adonis himself – allowed that to curb their frustration.
• Encouraging news for the very many investors poised to embrace the private rented sector: advertised rents in London have reached an average of £2,182 per month after posting their first rise in six months. Average advertised rents nationally have fallen to £966 per month – according to the Move With Us rental index – and look to be heading further south. That is a figure and a trend that may only tempt the brave. So what is the lesson? The PRS may help with one acute problem (housing) but will do little to ease another (the growing gulf between London and the rest of the country).
• Reputation is all; just ask Bloomberg as it battles to retain client goodwill in the wake of this week’s damaging revelations of abuses. This week EG talks to Nick Leeson, the rogue trader who has battled to recover his for several years. In the interview he draws parallels between his trades, which brought down Barings Bank, and the culture of over-lending that brought the Irish property market to its knees. The parallels may not be absolute, but his point highlights a fundamental truth: too little due diligence can have catastrophic consequences. That must not be forgotten as the economy heals and lenders ready to loosen their purse strings all over again.
damian.wild@estatesgazette.com
