Developer Land Securities said this week that London remains a “highly attractive” location for businesses after seeing rental values rise for the first time since the 2008 property market crash.
Better market conditions have prompted the developer to start investing in new projects. It has committed more than £1bn to projects since January.
Land Securities said a key driver was an expected shortage of rentable space in the City of London between 2012 and 2014.
“A number of 25 year leases were signed in the late 1980s and early 1990s, and a significant amount of 15 year leases [were signed] in the late 1990s and early 2000s,” said a Land Securities spokesman.
“This results in a constraint in 2012-14. Typically, big organisations tend to look for new spaces.”
The company is currently developing 20 Fenchurch Street, known as the “Walkie Talkie” in the City of London, in joint venture with Canary Wharf Group (NCE 27 May).
“We have the finance, the schemes and expertise to start additional projects in London”
Three further developments will start in 2011. They are 123 Victoria Street, 110 Cannon Street and 60 Ludgate Hill/30 Old Bailey.
“We have the finance, the schemes and expertise to start additional projects in London in 2011,” said Land Securities chief executive Francis Salway.
“Market conditions in our sectors are slightly more favourable than we expected.
“We maintain our medium term view of a recovery in property values, albeit interspersed with ripples.”
Outside of London, work has also started on the Trinity Leeds project. The 70,000m2 retail scheme is due to open in spring 2013.
But across the UK the outlook is less positive, said Salway, although rents tend to be “flattening out” rather than falling.