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Why the City of London enjoys its own economic climate

Last month’s practical completion of the Heron Tower in the City of London marked the latest milestone of the ever changing skyline in the capital.

Several other schemes are in planning or under construction in the London, most notably the Shard, which recently surpassed One Canada Square as the nation’s tallest building.

“The City of London’s economy doesn’t necessarily tie-in with the rest of the UK,”

James Gillet Capita Symonds

But while the appearance of tower cranes normally indicates a healthy economy, it seems this boom is restricted to the Square Mile and its immediate vicinity.

“The City of London’s economy doesn’t necessarily tie-in with the rest of the UK,” says Capita Symonds director James Gillett, who has over 30 years of experience in the London real estate sector.

“The City of London is still the place to be for finance, insurance and legal firms.”

The vast number of schemes has been prompted by the lack of prime office space in the City of London, coupled with a number of long-term leases up for renewal in the next two to three years (NCE 18 November 2010).

Investor Confidence

So while a small area of the capital is boasting new and exciting buildings, the same cannot be said for the rest of the UK.

“[Investors] don’t want to touch the rest of the country,” adds Gillett. “It’s a tale of two markets.”

However, there are bound to be some knock-on effects for the rest of UK, it is interesting to look at major schemes across the capital.

By far the biggest scheme is the Shard at London Bridge, just south of the City.

Construction of the Shard is being led by NCE Consultant of the Year Mace, with WSP as structural consultant and architect Renzo Piano.

The central core construction has reached level 72 with a further eight stories to go. Steel frame has completed up to level 40.

The building forms part of the £2bn London Bridge Quarter. Although not strictly within the Square Mile, Gillett adds that is almost considered the City by clients.

Latest to be finished is the Heron, which has come at a good time for its owner Heron International.

The 230m tall building, built by contractor Skanska, managed to keep funding in 2008 during the height of the credit crunch when other schemes were axed. Its owners are reaping the benefits of staying the course.

Restarted schemes

The Cheese Grater, Helter Skelter and Walkie-Talkie - all nicknames - are three more buildings that were put on hold during the credit crunch but are now under construction.

Piling began for the Cheese Grater, formally the Leadenhall Building, close to Liverpool Street last December. Developers British Land and Oxford Properties are promoting the 224m tall tower designed by Rogers Stirk Harbour and Partners.

The project was due to go ahead in 2008 but was put on hold following the start of the credit crunch and subsequent drop in office rental prices. It restarted last year and is due for practical completion in 2014.

Developer and contractor Brookfield has made a grand gesture and restarted plans for the Helter Skelter, also known as the Pinnacle on Bishopsgate in the City of London.

Developer Land Securities has also revived its Walkie Talkie building, formally 20 Fenchurch Street, also mothballed thanks to the credit crunch.

Developers British Land and Blackstone have plans to redevelop Broadgate, close to Liverpool Street. Despite the current buildings only being constructed in the 1980s, many are looking again at the now seemingly outdated structures and are seeking alternatives.

Possible client Swiss banking giant UBS - already a resident above Liverpool Street station - has expressed a desire for an updated office space.

While many are heralding the revivals, less is known about genuinely brand new development potential and Gillett suggests a cautious appreciation and understanding that the boom is limited not only to the capital city, but to just the Square Mile and its edges.

Coupled with high levels of empty office space across the rest of the UK, will tall buildings continue to rise beyond the Square Mile?

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