One scheme helping to alleviate the crush is Crossrail, Europe’s
largest construction project. Due to open in 2018, it will link the
East and West extremities of the city, covering 62 miles in total
and taking passengers from Heathrow Airport to the city in just
36 minutes. It is infrastructure investment that is already paying
dividends – the demand for land close to future Crossrail stations is
rocketing, and previously unviable office locations are now sought
after destinations.
But while London’s internal transport infrastructure is an ongoing
battle for investment in capacity, its links to the wider world are
arguably unrivalled among any other major city. Paris and Brussels
are just over two hours away from St. Pancras by Eurostar train,
with major centres such as Amsterdam, Frankfurt and Cologne are
due to be served directly in the near future. London’s five major
airports link the city to virtually anywhere on the globe, with 72.3
million people a year travelling through Heathrow alone. London
is at the centre of a web of transport links – a factor that makes
the capital even more appealing to major occupiers in search of
headquarters.
This continued rise in demand for business space over the past
two decades has seen a shift in the centre of gravity for London’s
traditional CBD. Canary Wharf, built in the 1980s, has seen its ups
and downs through the economic changes, but now is home to many
headquarter buildings with tenants including Clifford Chance, JP
Morgan, Credit Suisse, and Barclays Bank; commanding a rent of £
35-45 per square feet per annum.
London remains increasingly attractive for commercial property
investment. Its continued ‘safe haven’ status, independent
currency, and buoyant occupational markets have sustained frenetic
investment activity over the past five years. Yields for prime office
buildings in the main districts of the city of London and the West
End now stand at 4.75 percent and at 3.85 percent respectively.
Recent notable deals include 22 Hanover Square in W1 purchased
at £155million and a yield of 3.35 percent, and £ 1,773 psf capital
value. It is let to JLL to March 2017, and was bought by India
Bulls, who also purchased 9 Marylebone Road, Colliers former
offices, in Sept 2012. 60 Holborn Viaduct in the city was bought
by AXA Reim at £245million and a yield of 4.75 percent.
Despite recent high levels of investment and development in
London, it will always be constrained by a lack of available land
which, in turn, impacts the value of the opportunities which do exist.
Large swathes of land in London, both residential and commercial,
remain in the ownership of large and historic estates such as the
Grosvenor Estate and Cadogan Estates, as well as ownerships of
the Crown and Church Commissioners. Nevertheless, the graph
shows the influx of capital into London, confirming its place as a
key location in the world’s economy, and the sources of investors
at the current time.
Due to lack of space, areas tenants would never previously have
considered as desirable are now becoming sought after and in some
cases trendy locations. These include Whitechapel and Clarkenwell
as well as Farringdon. In Clarkenwell, in the last three years rents