London: Developments under threat!

A new report published by EC Harris has warned that half of London's £12 billion development pipeline is at risk of never being built.

The report, titled London Office Development:The Challenge Ahead, reveals that the inability to attract pre-let tenants and secure external funding was jeopardising the 150 planned schemes, which have the potential to deliver 53 million sq ft of office space by 2016.

According to the report, the City of London accounts for 50% of all planned developments and the size of these developments are on average twice the size of those planned for the West End. The large scale tower schemes planned or under construction in the City, such as the Cheesegrater and Walkie Talkie push the average project size to 420,000 sq ft, compared with only 240,000 sq ft in the West End.

There is huge potential for growth in the coming years, with up to 70 million sq ft of office space leases expected to expire before 2017. However, the uncertain economic outlook is blamed for increasing tenant caution; most tenants would prefer to stay put and extend existing leases rather than take a risk on a significant pre-let. With the euro crisis far from over and the UK economy still in the doldrums, it looks unlikely that this will change anytime soon.