Last week research undertaken by Driver Jonas Deloitte prompted the question whether the 2.4 million sq ft of skyscraper space under construction in London warranted the demand. The space in question, which could accomodate approximately 25,000 workers, includes:
52-54 Lime Street, The Scalpel, 560,000 sq ft. Planning permission has been submitted by WR Berkeley, who hope construction will commence in 2013 and complete in 2017. 80,000-100,000 sq ft is reserved for the insurance giant which is funding the project.
Leadenhall Building, The Cheesegrater, 587,867 sq ft for completion in 2014. Aon have prelet 191,988 sq ft for its new global HQ.
20 Fenchurch Street, The Walkie Talkie, 661,504 sq ft for completion in 2014. Of which Merkel have prelet 51,498 sq ft; RJ Kiln prelet 78,226 sq ft and Royal Sun Alliance recently confirmed they will occupy 70,000 sq ft.
Not to mention the Shard which will offer 574,638 sq ft of office space, none of which has been prelet.
Greeted as a fairly conservative figure, the main cause for concern amongst sceptics was the fear of mass job cuts by investment banks, already a very real problem. It was reported on Friday that Nomura had sublet 30,000 sq ft of space, left vacant by job cuts, at their headquarters in Watermark Place to M & G, which will act as overflow for their adjacent HQ at Governors House.
BNP Paribas, who have just been confirmed as the Post Office's proprty portfolio managers, released a paper that while unrelated, compliments DJD's quite nicely. Their findings suggest that the dynamic and economically driven TMT sector could easily fill this excess space. the research shows that the sector's demand is considerably outstripping other sectors and, in total, BNP PRE forecast that TMT sector demand for London office space will hit 4.6 million sq ft by the end of 2014.
Traditionally TMT's have based themselves in the West End, however, the establishment of Tech City, the hub centered on East London's Old Street roundabout is attracting a multitude of start up tech companies. Just to give you an idea, tenants include; Thin Martian at 32-37 Cowper Street, Last FM at Karen House, Display Digital and Solid State Group at 86-90 Paul Street. More established firms here incluse Yammer at 80 Great Eastern Street and Google who opened a new campus at 4-5 Bonhill Street.
As TMT's expand they become increasingly footloose and coupled with improvements in technology, such as cloud computing, are taking advantage of their geographical flexibility. Facebook, Apple and Informa have all chosen to locate themselves in the West End as opposed to the tech savvy East.
If BNP's prediction comes true we're going to see a huge demand for office space and this is before the estimated several million sq ft of floor space up for lease renewal elsewhere in the city between 2014 and 2016 is taken into consideration. I am not suggesting that we're suddenly going to see Facebook and Google move into the financial district, but for the 63% of respondents who believe that the right office space is crucial for building the right brand and 55% who believe that having the right office is essential for attracting the right talent, being a TMT in London right now isn't the worst thing in the world.