The future shape of London – GVA
Which parts of London will change the most over the next decade, and what will influence that change? New research from GVA and Centre for Cities has sought to answer these questions, considering the public policy drivers of property market change and development, infrastructure investment in the capital, and prevailing market trends.
The greatest market change over the next ten years is likely to be found around the edges of Central London and at new transport hubs, the report says. Around the centre of the city, the push eastwards to Farringdon – Smithfield, Shoreditch, Dalston, Old Street and Aldgate East is expected to continue “and the strength of the West London market is likely to be cemented by the commencement of redevelopment at Earl’s Court,” it concludes. The area of greatest change is likely to be south of the Thames, at inner Southwark – Bankside – Bermondsey, and Nine Elms/Battersea. The effects of the Shard, improvements at London Bridge station, Bermondsey Spa and so on, together with developments at Nine Elms and Elephant and Castle are likely to increase momentum in this area.
The report also names six ‘Places to Watch’, where it is felt that the combination of market, transport and policy factors will create “real opportunity for property market change and regeneration”. These are:
• Old Oak Common / Park Royal
• White City
• Tottenham Hale / White Hart Lane
• Royal Docks
• Deptford Creek
• Croydon town centre
The report’s conclusions with regard to office space to buy and to let across the capital are that the strongest growth in office-based jobs during the next ten years will be in the City of London, Westminster, Tower Hamlets and Islington. “Increasing foreign investment in large-scale office development may reinforce established markets and expansion is therefore likely on the central fringes in places such as Farringdon,” it adds.
The report also points out, however, that demand for office space in central London has been driven in part by the TMT sector, which was responsible for 20% of all activity in central London during 2011 – a 50% jump from the previous year. These companies, which have more flexibility in their location requirements, are more likely to move to fringe or new locations. By contrast, the prospects for major new office developments in many locations outside central London are in decline, the research says. So, while some established areas may become more marginal, it says that some outer London locations have the potential to become stabilised as new office locations – for example, White City.
Turning to the retail sector, the report says that while central London locations have remained buoyant, secondary retail centres have been affected by falling demand, leading to higher vacancy rates and lower rents. Reports that Westfield and Hammerson will make major investments in Croydon suggest that “large, highly accessible centres will remain desirable to investors, possibly at the expense of planned investment in smaller, outer London town centres”, the research notes.
