Shortage looms

Even though the number of new schemes has increased, Midtown and the Southbank are still beset by a shortage of prime office space The result, said a report by EA Shaw, is that rents are increasing and have reached £618.70 a sq.metre (£57.50 a sq.ft.) in the WC2 area. Relief is at hand for supply with a number of large schemes completing before the end of the year, such as 1 Kingsway, Castlewood at 85 New Oxford Street and 11 Strand. EA Shaw’s Charles Killen said: “Market conditions continue to encourage an increase in small and medium sized refurbishments.

With a number of significant schemes due for completion in the latter half of this year and in 2012 across Midtown, Southbank and Soho (but not ready immediately), rents look set to rise in the next few quarters.” The development pipeline in Southbank is dominated by the Shard and The Place but there is a healthy appetite for new schemes in the area, such as Chelsfield and London & Regional’s scheme for 116,125 sq.metres (1.25 million sq.ft.) of mixed use space including residential for the Elizabeth House site adjacent to Waterloo Station.

With the appointment of David Chipperfield as thearchitect, this is likely to be a landmark project. Chelsfield’s Yair Ginor said: “We have taken a daring approach with the new scheme and have told the architect to think about Waterloo Station and to focus on public realm improvements.” Not surprisingly, Midtown is a popular area for investment, one of the latest being the purchase by the Canadian pension fund, Ontario Municipal Employees Retirement System (OMERS) of a 50% share of MidCity Place from Beacon Capital Partners for a rumoured £142 million. It is part of the policy of OMERS to broaden its European investment base. The property will go into its Oxford Properties Real Estate subsidiary. Also on the market is the former Reuters headquarters at 85 Fleet Street which is being offered by Pramerica, the investment arm of Prudential Financial of the US, through Jones Lang LaSalle for close to £80 million.

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