"Financing projects from £50,000 to £100 million"

Many London office developments may not go ahead

Many London office developments may not go ahead

Many of the City's 150 planned property development projects may go unfulfilled, consultants have been warning.

Property consultants EC Harris have warned that many City property developments may not come to fruition while the Eurozone crisis continues to affect property finance and the supply of pre-let tenants for the schemes.

The 150 potential projects in the pipeline could deliver over 50 million sq. ft of office space by 2016, at a construction cost of £12 billion. This expansion has traditionally been driven by a shortage in high-quality space in the City.

However, the ensuing crisis has altered tenant demands, and there are signs that tenants are prepared to seek cheaper alternatives rather than new build offices.

EC Harris’ head of research, Simon Rawlinson, has pointed to the advantage of timing. Two new skyscrapers, the Cheesegrater in Leadenhall Street and the ‘Walkie Talkie’ in Fenchurch Street, are due for completion in 2014 when many leases expire. This allows companies to migrate into new office space seamlessly and without many of the perils of pre-letting years in advance.

Towers also prove advantageous at this time of wavering demand as the residency tends to be held by numerous clients rather than one.

"Developers that don't have a joint venture partner, are dependent on a pre-let or without alternative sources of funding will struggle most to get projects across the line", Rawlinson added.

Tuesday, 21 February 2012 14:48
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