Unless you’re Google, you won’t need a helter skelter to get you from office to ground floor, and forget calming water features or chill-out zones. The must-have accessory for commercial property developers today it seems is greenery. From the tranquil roof gardens of the Battersea Power Station development to the hotly debated Garden Bridge, we just can’t get enough of lush vegetation in the capital.
In both the residential and commercial markets, properties that boast views of green space typically command a premium of between 20% and 59%, depending on location, according to Land Registry/Lonres figures.
This could result in an unexpected windfall for companies that happen to be based at either end of the Garden Bridge, which when it opens in 2018 will link the South Bank to Temple station and the Strand. Its planners hope that “the iconic bridge will regenerate these areas, revitalise the area around Temple and Aldwych and help open up areas such as Middle and Inner Temple and the Victoria Embankment.”
The Garden Bridge, one of four new bridges planned across the Thames, has been touted as helping to close the North-South divide when it comes to property prices. The average increase in value that properties on the North side of the river currently enjoy over the South can be as high as 95.7%.
And plenty of “the green stuff” is what businesses will need to secure ever scarcer office space. Throughout 2014, the market has been very tight for space with firms competing for premises as soon as they become available. Availability fell to 11.8m sq ft in October, a fall of 3% on the previous month, and is now 26% below the ten-year average. At the same time, properties under offer in Central London increased by 3% to reach 3.7m sq ft. The inevitable result of this high demand/low stock scenario is that vacancy levels are at an all-time low while rents are reaching record highs.
This pattern looks set to continue into 2015, although the general election may introduce some uncertainty into the marketplace, so there is no relief in sight for cash-strapped tenants.
In a knock-on effect, the scarcity of prime office space in what are traditionally the most desirable areas of London is forcing firms to move out of their comfort zones. We are seeing companies move from high cost locations such as Mayfair, St James’s, Marylebone/North Oxford Street and Soho, where rents and business rates have risen significantly, to more cost-effective areas such as the South Bank, City of London and City fringe districts like Clerkenwell, Farringdon and Shoreditch.
October’s Omnicom deal, in which the media giant acquired 354,400 sq ft in the former RBS building on the South Bank, is one example of this trend. It is believed that Omnicom – holding group for media agencies Abbott Mead Vickers BBDO and TBWA London among others – is relocating from Marylebone to physically align its agencies and its new offices can accommodate about half of its 8,000 UK employees.
News UK was the first major media company to spot the area’s potential, moving to The Place in 2013. Now with WPP’s MEC and Ogilvy Group, along with Al Jazeera and United Business Media set to follow, the South Bank may yet become “London’s new Soho.”
Whatever the location, an appealing office environment is increasingly seen as a vital factor in the battle to attract and retain the best people and this is having a direct effect on building design. Developers now routinely incorporate features such as roof gardens and terraces into their plans, giving urban office workers a taste of the countryside in the heart of the capital.
 Land Registry Q1 to Q3 2013
POSTED: 18 Feb 2015