The Ripple Effect - The Next Generation of Office Markets
Fuelled by global trade and industry, London has evolved from a collection of small villages, rippling out from Mayfair and The City to become the megacity it is today. The future of London will continue to be built on this, but as both its population and business communities keep on growing, central London is becoming crowded. So, where will the next generation of London office markets be and why should tenants be thinking of them now when they are not even built?
Canary Wharf and the Docklands is the most recognisable modern office market that has developed in recent times. Since the first office building topped out in 1990, the 97-acre estate has continued to evolve, with Wood Wharf to be its latest addition. Other areas which have firmly established themselves as core central London business districts include Paddington, King’s Cross and the Southbank. Whilst developers and landlords look to develop further within these business districts, the fast pace at which new office locations have been developed over the past 30 years means that despite some still being in their infancy or still being built out, other areas are piquing interest.
The new kids on the block in terms of locations include White City, Vauxhall-Nine Elms-Battersea (VNEB) and Stratford. All three of these have been driven by the wider regeneration of the local area and investment into public transport links. The latter more famously developed as a result of the 2012 London Olympics. The speed at which these areas have not only been built out, but also attracted high profile tenants is like lightening from a historical comparison. Apple at VNEB, Publicis and Net-a-Porter at White City, TFL, The FCA, BT Sport and UCL at Stratford are just a few of the well-known names supporting the growth of these locations.
The next generation of office markets across London which are waiting in the wings for their moment to shine, continue the ripple effect out from existing markets. Where are they?
Old Oak Common – the redevelopment of the railway maintenance depot is to become a key transport hub for London and the south east. A new station will provide an interchange for HS2, Crossrail and other national rail services, creating what is expected to be one of the busiest points on the network. The recent recommitment by the Government to continue with the HS2 project is expected to spur on plans for the wider regeneration of the area. Plans which will see it bring forward not just new residential development but a new commercial district.
Brent Cross South – An ambitious plan for a new town centre and mixed-use development close to Hendon and Cricklewood looks set to deliver 6,700 new homes and over 3 million sq ft of office space. The masterplan has a timeline of 10-15 years and with development contracts signed in 2019, enabling works are expected to start in 2020 with first buildings coming out of the ground in 2021-22. The site will incorporate a new railway station, Brent Cross – West Thameslink.
As heavy industry moved out of London it has left behind swathes of docks, factories and warehouses in East London. Whilst residential development has driven regeneration of these areas, the commercial element has been less than forthcoming. Yet, renewed commitment and investment will see momentum gather at the Royal Albert Dock site and further progress on plans for Silvertown Quays, both of which will boast new business districts with a combined total of over 8 million sq ft of commercial space. Whilst the former has already started development and even delivered some space, the pace and quantum has been lacking. Yet improving links with Crossrail, expansion at nearby City Airport and increased frequency of river boats should give this location added credence. As for Silvertown Quays, gaining planning permission for its first phase of works is a step forward for this scheme.
Canada Water – A stones throw away from the established Southbank office market and in the shadows of Canary Wharf across the river, Canada Water with its excellent transport links via the Jubilee tube line and the London Overground line is set to become Zone 2’s newest office location. The mixed-use masterplan that received the seal of approval in 2019 is expected to deliver up to 2 million sq ft of office space. The proximity to central London will make this an exciting opportunity for some businesses.
For tenants, why start thinking of these locations now? There are two main reasons; beating the competition and a price point.Research shows us that businesses of all sizes are starting searches a lot earlier than previously. Securing space ahead of the competition has certainly heated up in recent years. Businesses who may have wanted to move to the redevelopment of Battersea Power Station were beaten to the punch by Apple’s pre-let of the entire first phase of the scheme. Pre-lets at IQL Stratford by TFL and FCA secured the newest buildings to greet you at the Olympic Park. Businesses especially larger ones continually assess their space plans and adjust them accordingly.
Those changes may suggest they exit a lease early in order to benefit from the new space and location. These could be gains related to personnel, productivity and/or a cost. Staff links to the physical office may be easier, access for clients may also be better. A new location out of central London could help with access to talent or housing for the workforce. The benefits to a business are not necessarily linked to the bottom line. Regardless of the drivers, the success of the new office markets in the past few years, shows that tenants are not just location agnostic but are also willing to take a punt on driving new areas of London forward.