Developer says property markets have ‘paused for breath’ after Brexit vote
Land Securities has confirmed that the Mace-built first phase of its massive £2.2bn scheme in London’s Victoria district finally completed in April, albeit late and over budget.
In its full-year results, the firm admitted: “The complexities of construction - together with competition for labour in a busy sector - delayed final completion and impacted costs.”
The first phase of the 897,000ft2 development includes two office buildings providing 480,000 sq ft of space, of which 49% is now let, 170 apartments and 80,000 sq ft of retail and restaurant space.
Mace was the main contractor on the scheme, and in May 2015 was forced to replace the concrete works contractor after the incumbent PC Harrington Contractors entered administration.
Mace declined to comment.
The second phase of the scheme called Nova East, comprising a 16-storey office building with ground floor retail, will only start on site “when the time is right” Land Securities said.
The firm saw its pre-tax profit drop from £1.2bn last year to £112m for the year to March 2017, which it said was primarily down to valuation changes. However, revenue profit increased by £20m to £382m, up from £362m.
Elsewhere in London, Land Securities’ redevelopment of 21 Moorfields above Moorgate underground station in the City has finished with the demolition phase and enabling works and construction of the raft that is to sit above the eastern entrance to Liverpool Street Crossrail station expected to begin shortly.
The raft is expected to be completed by July 2018 allowing for construction of the two new office buildings rising 16 storeys within 24 months, which Land Securities said would provide “an excellent prospect for the pre-letting market”.
Earlier this year the firm was in talks with Deutsche Bank over a pre-let deal for the project which coudl ahve spurred alterations to the current Wilkinson Eyre designs.
Land Securities’ current pipeline also includes a 360,000 sq ft scheme at Red Lion Court which is in feasibility, planning consent for 142,000 sq ft scheme at 1 Sherwood Street behind Piccadilly Lights in Westminster and a resolution to grant planning consent for 134,000 sq ft mixed use scheme at Sumner Street in Southwark.
Robert Noel chief executive of Land Securities said Brexit had brought forward the shift in balance between demand and supply in the London office market and that while there has been a reduction in construction commitments, lower occupational demand and a fall in rental values it was less than expected. Retailers also have become slower in taking up new space as shoppers showed more caution, he added.
“Put simply, our markets remain in good health but they’ve paused for breath,” he said.
“We hope the new government can give businesses as much certainty as possible on areas including tax, regulation, access to skilled labour and public spending such as investment in infrastructure - including desperately needed homes. A clear and ambitious strategy for improving digital connectivity would have a particularly powerful impact,” he added.