Estimates show that between 80% and 90% of the current volume of City floor space being built remains unlet
More than 8m sq ft of new office space is being developed in the City of London just as demand has fallen to less than during the last commercial property crash in the early 1990s.
The number of cranes across the City has raised concerns of a repeat of that crisis, when a period of frenzied overbuilding in the late 1980s led to swathes of empty office blocks in the Square Mile and the nascent Canary Wharf market.
British Land surprised many last week by remaining committed to all its proposed City schemes. Many had expected a delay to its speculative Leadenhall skyscraper, nicknamed the Cheesegrater, set to be completed in early 2011. Stephen Hester, British Land chief executive, told the Financial Times that there would be “some pain” to come in order to get through the cycle.
'Sometimes you get the judgment wrong,' he said. 'But we try to have a longterm view. Leadenhall makes sense to build even if there are short-term writedowns that can be written back up afterwards.'
Hester admitted that its Ropemaker development, a block of almost 600,000 sq ft that still lacks a tenant, would be delivered into a 'soft market' next year.