September 2010 Archives

It has been reported by the Daily Telegraph that the government is to abolish as many as 177 quangos, including British Waterways, according to a leaked Cabinet Office document published today. A further 124 are set for mergers or other reforms that were included in a letter from Cabinet Office Minister Francis Maude to other ministers, written in August.

This does not fare well for office occupation especially for those northern cities that rely heavily on government tenants to fill their city offices. But London will also feel the impact of these quangos vacating their London office locations. For one, British Waterways occupies 6,000 sq ft at 1 Sheldon Square, W2. On a positive note, it has emerged that the restructuring of the FSA will lead to a 500,000 sq ft Docklands requirement, which is good news for the Canary Wharf group who are currently at risk of losing JP Morgan at their Riverside South site.

Paris is set to start a gherkin war with London, following the proposal for a new building in Paris, designed by the architects Anthony Bechu and Tom Sheehan. See here for further information and pics. It is rather boringly called the D2 building, but may well be dubbed "Le  Cornichon" (french for gherkin) once its built. It will be sited in La Defence area of Paris.

Like the Swiss Re Building, it has lots of it is designed to be environmentally friendly, and has various eco-features such as a roof garden called a Sky Roof, as well as a Sky Lobby, which has a strange, moss-like growth on the windows:

Savills' new commercial development report reveals commercial development activity declined in August to its lowest level in fourteen months. It exposes an unsurprising steep fall in public sector office construction but also a concerning decrease in office construction activity by the private sector. Similarly it notes that there has been a decline in office fit-out activity, indicating a lack of occupier movement. This is not good news for the office construction sector although the affect of the summer holidays must be noted. In London this restricted supply will only further add to the predicted office supply shortage due in 2012.

To access the full report click here

According to CBRE monthly index the total property returns have slowed again in August, however marginally from 09% to 0.8%. The rate of growth has been going down slowly as demonstrated in the previous months, e.g. in May all property returns were 1.2%.

With the most significant yield shift and capital growth across the UK property now behind us, the investors are looking for a more compelling sings of recovery in the occupier markets before committing to buy more. This picture is painted across the UK market, however with the exception of London markets. Central London offices and retail have both evidenced recent income growth and continued strong investor demand. Central London offices were once again the best performing sub-market with a total return of 1.0%, which helped to boost the wider sector return that came to 0.9% for the UK offices.

All-property rental values were stable over the month; nevertheless again the strongest growth was achieved in central London offices where 0.5% rental value increase was registered. This largely offsets marginal weakness in August rental values growth elsewhere in the UK.

So good news for us in London offices team as we have letting and investment deals to write about in our LOMA Q3 2010 report, coming very soon!

The Financial Times has reported that Alistair Darling's supertax on bankers' bonuses has failed to change the industry's behaviour over pay as imaginative financiers devised ways to avoid it. He thought it was unlikely that the tax would be reinstated by the current Con-Lib coalition government.

The 50% tax on bonuses over £25,000 was deeply unpopular in the City of London amid complaints that talent would move to New York, Switzerland and Asia, where no similar measures were put in place. Those fears were buttressed this week by the news that Credit Suisse is awarding a one-off bonus in September to about 400 senior employees in London after slashing its UK bonus pool for 2009 in response to the tax.

Entrepreneur and founder of the SEED empowerment programme for women Lynne Franks has teamed up with serviced office provider Regus to create B.hive Business Clubs. The flagship centre, which is set to open at Garrick House, Southampton Street, WC2, later this month, is intended to act as a hub for professional women. The centre will offer the usual office amenities as well as a members-only lounge, a terraced patio and an area selling business and women's lifestyle products. Events such as networking lunches and workshops will be held and members will even benefit from discounts on major fashion and beauty brands.

Further B.hives are planned for Bimingham, Bristol and Manchester. For more information, see here.