Recent results from
major quoted property groups such as Land Securities, British Land and Gt.
Portland Estates suggest that the construction industry’s largest private
clients share Glenigan’s cautious outlook on new office development.
But they are also
pressing ahead with some major commercial construction schemes which will buoy
up tender opportunities, both in London and the regions.
At British Land,
chief executive Chris Grigg said last month that he was mindful of the
uncertainties in the market. But he also noted that demand for the group’s
office space was healthy with businesses continuing to commit to London and the
supply of high quality new space is constrained in the short term.
The firm’s ‘campus’
offering is driving demand for its space and it has launched a flexible
workspace offer, Storey.
Indeed, British Land
has doubled its committed construction pipeline of new space to 1.6 million sq
ft although the speculative element is limited to 4.5%.
The group has also
processed planning consents covering 1.9 million sq ft of construction
projects, including a major £300 million extension to its Meadowhall Leisure
complex in Sheffield. It has also submitted a planning application for the
Canada Water Master Development Agreement which will involve building projects
for 3,000 new homes, two million sq ft of workspace and one million sq ft of
retail and leisure space in Southwark.
Meanwhile, Land
Securities recently held out the prospect of a return to speculative
development. While the group’s current development activity is based on
pre-lettings – and it says Brexit is likely to lead to fewer construction
project commitments – chief executive Robert Noel said speculative development will
“become an attractive option in due course.”
Land Securities has
also seen demand for office space in London somewhat stronger than expected
over the past year. The group has progressed plans for 1.4 million sq ft of
building project developments and it is looking at plans for a further 0.8
million sq ft of space over this year. It is also looking to grow its pipeline
with acquisitions and partnerships.
Land Secs has
recently started construction works on a huge 564,000 sq ft new building at 21
Moorfields, which is being built over an entrance to Liverpool Street Crossrail
station and where Deutsche Bank has taken much of the space. Construction works
are set to complete by late 2021.
The group is also
planning a 142,000 sq ft mixed use development at Sherwood Street in the West
End, where it hopes construction works will start by April 2019. Two major
schemes in Southwark are also planned including a 135,000 sq ft mixed-use
scheme in Sumner Street where it hopes construction works will start in 2019.
At London-focused
Great Portland Estates, chief executive Toby Courtauld said in May that the
group was planning for continued economic uncertainty but looked to the future
with confidence. Occupier demand remains healthy across the group’s retail and
office portfolio which has 1.7 million sq ft of development potential, of which
0.4 million sq ft of were now on construction sites.
Indeed, Gt Portland
has recently started three new construction projects, all near to Crossrail
stations. They will provide 412,000 sq ft of Grade A mainly office and retail
space, including 221,300 sq ft at its Hanover Square scheme which is 26%
pre-let.
The group has also
made good progress on its substantial future development pipeline, involving
some 13 building projects covering 1.3 million sq ft. And after five years of
net sales, the group notes it has the financial strength to exploit any market
weakness where it unearths it.
