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London is experiencing something of a boom in the construction of new skyscrapers designed to introduce thousands of square feet of new office space to the capital – but will there actually be enough of an appetite among prospective tenants to make the gamble pay off for the developers?
“These developers are rolling very big dice,” reckons a property analyst for Evolution Securities, Alan Carter. New skyscrapers in London include Heron Tower, which concluded construction five months ago back in March and has so far let just one of its 36 floors, along with the Shard, the Cheesegrater, the Walkie Talkie, and the Pinnacle, all of which are at varying stages of build. In total, the new buildings will add as much as 3.7 million square feet of new office space to London by the time they are all finished and open for business in 2015.
However, more and more companies appear to be having second thoughts about signing on for new leases, with factors such as euro zone sovereign debt, the US credit rating downgrade, and sluggish global economic growth all contributing to the nervy climate.
“The phone has stopped ringing in the City market,” says one financial broker who wishes to remain anonymous, “but please don’t put my name to that”.
Carter says that in the current climate, skyscraper developments like the ones above would most likely not be considered viable. “You’d have to be a very brave company to commit to several thousand square feet right now,” he says.
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