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New London skyscrapers a big bet on the City of London’s future

The future City of London skyline: New skyscrapers abound

“Such an exercise in architectural uniformity, however, could never succeed. London was too large to be dominated by any one style or standard. Of all cities it became the most parodic and the most eclectic, borrowing architectural motifs from a score of civilisations in order to emphasise its own position as the grandest and most formidable of them all.”

Peter Ackroyd, London: The biography

One thing that struck me when I went to see the St Paul’s protests a few weeks ago was all the building going on nearby. Like all good Londoners, I tend to ignore the apparatus of the mammoth conglomeration around me – i.e. most of the 607 square miles of London – preferring to focus instead on my own little travails, and the local cake shop that has started selling Lamingtons. It’s how you stay sane in a city of eight million people.

Walking around the City’s streets on a Sunday, however, with time to look up without being hit by a cab or an Australian on a mountain bike, the construction work is obvious. If capitalism is in crisis, then somebody has forgotten to tell the commercial property developers. They are investing in new London office space like hippies are going out of fashion.

True, some of the sites were mothballed after the 2008 downturn. But plenty have already been dusted off and restarted. Some schemes, like Heron Tower and the upcoming Shard, were never halted.

The result is that London is going to look quite different in five years time, as the digital artist’s impression in the little picture in the top right shows.

London is getting ready for the next boom

Reinvention and thumbing its nose at history is what London does – ironically for such a great historical City. Those who’d preserve every sight line to St. Pauls are trying to turn unplanned and sprawling London into something it’s not.

This is a mercantile mega-colony, thriving on trade, competition, and opportunity. Everything else comes after.

Now, I’m not suggesting there should be no rules or planning guides governing development. Nearly all of what has survived, from the little Wren churches dotted about the Square Mile to the Huguenot terraces of rejuvenated Spitalfields are testament to the importance of that.

But cities need to keeping moving, or like sharks they die. Go to Paris if you don’t believe me.

In some strange way, these new buildings rising across London convince me even more than rational analysis that the world isn’t ending, that the West is not dead, and that I should not swap all my shares for gold. The animal is alive, even if its spirits are still breathless and it’s acting on instinct.

Next week I’ll look at some specific ways to invest in London property. Many of the listed commercial property firms look good value again, after coming down from the post-2009 surge that (happily) followed when I last bought commercial property. Indeed some of the reasons for buying then still look good today.

First though let’s set the scene with an eyewitness tour of the property development going on right now.

Think capitalism is dead? Let me take you by the hand and lead you through the streets of London…

The Walbrook Building

Just a few minutes walk down Cannon Street, the new Walbrook Building (owned by Minerva) is offering nearly 400,000 square feet of space. Some say Walbrook Street was named after a stream that used to run through the City of London walls here. Like most London rivers, it was long ago buried underground.

Bloomberg Square

Far more depressing than skyscrapers – or even buried rivers – is the modern ability for corporates to rewrite place names in their image. Thus Walbrook Square (just over the road from the building above) is to become Bloomberg Square, after the media giant acquired the site for its new UK head office. The developer is unlisted Stanhope PLC.

20 Fenchurch Street

A few minutes walk further east brings us to 20 Fenchurch Street. This will eventually house the bulging 160m Walkie Talkie tower, the first of London’s big four new skyscrapers on our tour, and the one that most divides opinion, even among high-rise aficionados. Its developer, Land Securities, had planned to have the tower up by now, but the credit crunch squashed that timetable. It’s now due to be finished by 2015, though I didn’t see any evidence!

The Leadenhall Building

Anyone familiar with this part of London will find themselves drawn to the iconic Lloyds building on 1 Lime Street – still one of London’s most intriguing. The Leadenhall Building just across the road will at least physically put the Lloyds building in the shade, however. Better known to Londoners as The Cheese Grater, this 225m tower was designed by Richard Rogers. Work was halted by owner British Land in 2008, but it’s apparently restarted in conjunction with Oxford Properties. (Wikipedia claims 900,000 sq ft of office space, which makes me wonder if I’ve photographed the wrong corner!)

Heron Tower / 110 Bishopsgate

Here’s one they finished earlier. A short walk from Leadenhall Street, Heron Tower stands 230m tall if you count its mast, which makes it London’s third tallest building. To be honest, it’s not very exciting – people who complain about walkie talkies and cheese graters should come and see what sensible looks like.

The Pinnacle / Bishopsgate Tower / Helter-Skelter


Yep, it’s so far just more skips, cranes, and a snazzy font from the 1930s. But The Pinnacle looks set to be one of London’s most attractive super-buildings, with its swirling organic shape that you can see on its Wikipedia page. The building will be coated in solar panels, and like the nearby 30 St Mary Axe (aka The Gherkin) it will have a double-skinned layer to improve climate control. The unlisted developer, the Union Investment Real Estate fund, is promising nearly 1.5m sq ft.

Broadgate Tower

While you’re up this end of the City you could walk a few minutes further north to check out the 164m high Broadgate Tower. This is another British Land effort, and it’s notable for a variety of reasons, not least of which is that construction was delayed for years by the discovery of archeologically significant ruins. Much of the tower is built over the incoming train tracks to Liverpool Street station, with now-defunct Railtrack having granted the company air rights.

Nearby Occupy graffiti

This graffiti on a nearby building faces Broadgate Tower and the City. It’s nicely done, but in the context of all this development it sounds like a child refusing to eat his peas. But besides my ongoing sympathy with anyone frustrated at the banking blow-up and the huge rewards earned for such a monumental cock-up, they also got an extra vote because the gentrification around here is breathtaking and a little out of control. Traditionally it’s been a shabby area on the City fringes, with special areas like Folgate Street protected by anonymity. But as Spitalfields rolls into Brick Lane, it’s becoming tediously shiny.

30 Old Bailey

This isn’t anywhere near the other sites, but I’ve included 30 Old Bailey as an example of one of countless smaller building sites strewn between the City and Stratford, via the Isle of Dogs. According to Land Securities, it’s another 300,000 sq ft of new space on the way. If there’s truly another headcount cull in the financial sector, London is going to be THE town for cheap offices!

The Shard / London Bridge Quarter

Finally, at the other extreme, The Shard – or as nobody but the developer calls it, London Bridge Quarter. Differing from the others here in being (just) South of the River, The Shard will be the European Union’s largest building at 308m when it’s completed in May (although only 45th tallest in the world).

The scale when you get up close puts your heart in your mouth. I was there on a Sunday, and everybody I saw walking past looked up, like they were marveling at some super tall alien spaceship. I suppose this was what it was like in New York when they built the Empire State Building. Remarkable.

Make sure you come back next week for some practical ideas on how to invest in London property and offices via UK-listed property firms, especially if you are looking for income.

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{ 13 comments… add one and remember nothing here is personal advice }
  • 1 Ross Parker December 8, 2011, 10:45 am

    A sign advertising the fact that there is 400,000 sq ft of prime office space completely empty in the middle of the City is not, to me, an obvious “buy” signal.

  • 2 The Investor December 8, 2011, 4:56 pm

    @Ross — Hah, fair point, but my argument is the professionals are getting going and we can buy into the new cycle.

    I remember when there was no floor space in the City. The big REITS cost circa 3x more than today! Buy cheap and good for an income and wait is my view on commercial property.

    More next week!

  • 3 Si December 8, 2011, 5:40 pm

    I walk past several of these developments on my way home each day, as a Land Securities share owner, it fills me with pride to visualize my 0.0001% ownership of these prime locations!

  • 4 Salis Grano December 8, 2011, 7:47 pm

    A nice summary of the major developments although you missed out the Nomura offices by the river in Angel Lane. Despite the high profile of some of the developments, the Corporation says that the amount of new floorspace in the pipeline is not large by historical standards. However, the Walbrook building has been empty for 18 months — something odd there. Also, it is very apparent that there is a lot of space to let in the smaller buildings. Almost every street has some older buildings that can’t find tenants. It looks like there is little demand from the City SMEs

    DTZ went bust and COL is doing badly. I think there is still a lot of property on the books of major banks. I don’t think now is the time to invest in any big way, although I did get some LAND around 630p a few weeks back

  • 5 ermine December 8, 2011, 8:38 pm

    But first the Euro has to blow… Some things have to get worse before they get better, like the forest fires needed to set the seeds of the new in the ashes of the old. That which does not kill you makes you stronger.

    I was wondering why they were taking such a long time finishing that Leadenhall works near the Aviva HQ. Nothing seemed to get to stick up there for years, which is bad on a building site. I hate it the way these days they erect the massive wooden screens so you can’t see in.

  • 6 OldPro December 8, 2011, 10:15 pm

    Don’t recognise bits of THE City anymore… suppose its a sign ‘they’ are doing something right… I don’t suppose Ben Johnson would recognise it either… All things move on and if you can make a profit out of it along the way so be it!

  • 7 mark senior December 9, 2011, 9:18 pm

    Hi

    Does anyone know which of the UK based property investment trusts has its portfolio concentrating on London (preferably central) commercial property?

  • 8 The Investor December 10, 2011, 12:04 am

    @mark — Several of the REITs have a London-focus. Perhaps one of the purest plays on London office space is Derwent London.

    I’ll be looking at some specific REITs next week, so stay tuned!

  • 9 mark senior December 10, 2011, 12:42 pm

    @ The Investor

    Thanks for the idea. Looking forward to your post next week.

    What I am trying to do is, invest into London property companies eg British Land, which stands at a discount to NAV AND yields 5.5%

    What i then wanted to do is invest via an Investment trust (ideally standing at a further discount) to get double bubble! rather than investing directly. It may not be possible in the property sector at present… but no harm looking!

    I am moving quite large chunks of portfolios to Investment trusts standing at discount to NAV as I believe they will be the most obvious beneficiary of RDR.

  • 10 Jon Gorman December 11, 2011, 10:42 am

    Nice post. in these days of doom and gloom it is easy to forget that all this economic stuff its cyclical. This post shows that not only is this the case but there is serious money being invested in projects on this basis. All of us know this, but if you are like me and underwater after the recent market falls and holding on for better times then it’s nice to see something to support your faith.

  • 11 Ben Neale December 14, 2011, 6:04 pm

    I like your optimism – as Jon said above, with relentless doom and gloom, it’s easy to forget that while bust follows boom, the reverse is also true. I’m also with you on London’s capacity for reinvention. The city is in a perpetual state of reconstruction. I love the fact that it’s an organic, living entity, constantly evolving – that’s what makes it so resilient. And I personally like the juxtaposition of brand new buildings with those that have been there for centuries. Yet more evidence of London’s is a living city, not a museum!

  • 12 Ben December 15, 2011, 1:25 pm

    @Ben Neale

    wise words… “It’s my belief that history is a wheel. ‘Inconstancy is my very essence’ says the wheel. Rise up on my spokes if you like but don’t complain when you’re cast back down into the depths. Good times pass away, but then so do the bad. Mutability is our tragedy, but it’s also our hope. The worst of times, like the best, are always passing away.”

  • 13 Aaron Apostolides May 4, 2013, 12:21 am

    London is not well known for tall buildings or skyscrapers but that’s what London needs to become no stranger to great modern Architecture. Loads of people say that’s what attracts the tourists and I actually heard someone say to me that London’s skyline has been the same for years and it’s boring I totally agreed with them and I said to them that the reason is because that the contruction of any sort of building that will make a difference in London and change the skyline is only half complete or construction hasn’t even started.

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