Developers were building 5M sf of office space before the coronavirus hit, so what happens with all those glass towers?
Plummeting demand and fears of density could change how developers build
Some London developers could find themselves building office space for tenants that don’t exist, if they already aren’t.
The economic downturn brought on by the pandemic is also likely to mean at least a temporary end to the type of monumental office projects born from the optimism of the last several years, according to the Financial Times.
Number 22 Bishopsgate, a 62-story Class A tower that will be the tallest office block in the city when completed, could be the last of its kind for a while. AXA IM Real Assets was set to complete the project between March and June.
There’s around half a million square feet of space unleased in the tower. The firm’s head of development in the U.K., Harry Badham, said he’s confident about leasing because of the uniquely large floor plates and interest from renters looking to move in a year from now.
Chris Lewis, director at office tenant advisor DeVono Cresa, said the project “probably marks a high-water mark for skyscrapers,” but said developers will have a tough time justifying such large-scale projects in a post-coronavirus world and that the pandemic could discourage tenants from renting in a building fit for 12,000 people.
Work started on 5 million square feet of office space in London from October 2019 to March 2020. New projects could get nixed — around half of developers surveyed by Deloitte at the end of March said they planned to scotch them. All of those developers surveyed said they were pessimistic about the London office market.