According to the Economist Intelligence Unit, London will become the world’s second-best city in which to do business by 2025. Apparently this is because of its strong financial markets, infrastructure and global appeal. It is predicted to leapfrog the cities of Singapore, Hong Kong, Tokyo and Paris. The capital’s infrastructure has been boosted by the 2012 Olympic Games and it will only be placed behind New York City.
The long-anticipated and triumphant 2012 Olympics provided the perfect platform to market London once more (and off the back of the Diamond Jubilee celebrations), reminding the world of the city’s leading position in terms of investment, business, and tourism. In a week in which there has been an inkling of positivity in terms of the economy, which builds on other indicators that the UK economy may be taking steps towards the road to recovery, we can look both backwards and ahead. The lead up to the Olympics inevitably saw a huge amount of development roll out across Stratford and the eastern fringe of London, with the focus for once being on the East as opposed to on the City and the West End. In terms of ‘legacy’, that Olympic buzz-word, a whole swathe of the capital owes its very existence to the Games, which occurred nearly 2 years ago now. Maps had to be rewritten and just as the world sat up and took notice of London’s Olympic Games, so now does London need to sit up and take notice of this newest of areas in the capital.
Moving forward, the focus remains on the East. Granted, the City is starting to prick its ears up in terms of some bigger acquisitions and ambitious projects, but it’s the quieter but steady development in the areas like Aldgate which is starting to look interesting. Once deemed an undesirable area to live in, Aldgate is seeing development surge ahead, and demand for properties – both commercial and residential – is noticeably increasing. Because of the transport links, enhanced since the Olympics, and the area’s proximity to the City, more and more offices and residential buildings are being built there. And lots of these residential flats are high-spec, expensive properties, and are being snapped up by City workers. Watch this space in the East.
As the success of the TMT sector shows no sign of slacking off, those who have an interest in Aldgate will hope that the area is able to piggyback on the rise of these technology, media and telecommunications companies by attracting more occupiers and by developing buildings that will suit their needs. The fact that Aldgate is only a short distance from Shoreditch will create the perfect overflow district for TMT companies looking to expand or relocate into buildings which have been designed for their use (as opposed to manipulated to them) and at rental levels that will initially seem attractive.
Other factors might also influence a decision to move East for many companies. The West End simply seems too many occupiers to be overpriced, boosted by a shortage of office supply, with prices set by competition rather than because of the space itself which is on offer. The burgeoning commercial-to-residential conversions can only exacerbate this problem, and the last thing a tenant wants is more demand and less supply a few years down the line at the point of rent review. The rate of these such conversions is escalating, with every second office owner seeming to want to convert to take advantage of the opportunity for huge capital growth. As a result, could we be about to see a real and significant push East? The already growing areas of Clerkenwell, Farringdon, Old Street and Shoreditch (where huge developments are already planned) could be bolted on to other eastern areas of Dalston, Whitechapel and the emerging Aldgate.
Could we take this one step forward and ask whether the days of Mayfair being known as Hedgefund Valley are about to disappear? Not any time soon – but I do think there will be an increasing and continuous shift eastwards for a large number of occupiers. It will become increasingly difficult to overlook the area’s positive factors such as infrastructure, accessibility via communications, sector-specific development, government investment, a good mix and balance of commercial and residential space and associated amenities, and the all-important financials, all of which stack up from a pure business point of view. Sounds like a good legacy to me.