No new London office space available in 2012
King Sturge, a leading international firm in property consulting, has reported that there will be no new office space available in London by the year 2012. The cause is the cancellation or postponing of major construction projects, among them the “Cheesegrater” under development by British Land and the “Walkie Talkie” by Land Securities.
Due to the worldwide financial downturn, amounting to recession in most industrial countries, developers have stopped or drastically curbed investment in new construction. In London, many of the city’s businesses had to reduce staff, leaving empty space that amounted to 20 Gherkin Towers. At least 58,000 employees in banks and insurance companies were let go over the past year.
Thus with dwindling demand for office space and the risk of property lying empty, plus rising costs, an ongoing credit crunch and even new environmental regulations, many builders and developers have pulled back to wait and regroup. In the past, the city has averaged about 2.2 million square feet of new commercial space per year. At present the forecast is for no additional rental space except at the Heron Tower, and the Spanish property company Metrovacesa paid a huge penalty to avoid having to buy a site in London. Click desk space London for information on availability and shared offices to rent.
The upside of all this is that by 2012, when the market is expected to be rallying, rental space in the city will be so scarce that prices will climb in proportion to (limited) supply and resurging demand. King Sturge predicts that rental rates will rise to at least £47.5 per square foot by 2012.
