CRACKING ON THROUGH THE STORM
“It has been a fascinating two days. Tuesday saw the Opportunity London Investment Summit and then the London Real Estate Forum VIP Reception. And today we have been at the London Real Estate Forum itself.
So it’s provided the perfect opportunity to speak with developers and investors, policy makers and professional service firms and ask how everyone else is doing and – more importantly still – feeling. The answer is a typically brilliant representation of the development community – which I can best summarise as “we know the fundamentals are crap but, hey, we’re an optimistic bunch, so let’s crack on”.
On the fundamentals, we know the list by now. We are in a perfect storm of three weather patterns, all at the same time:
1. Viability challenges – high borrowing costs, high build costs, flat or falling values.
2. Political inflexibility – politicians are failing to adjust from ‘deliver all policy requirements or don’t expect permission’. Land value alone can’t cure all ills.
3. Regulatory inaction and indecision – I’m being polite here. Most people are now of the view that Government is actually making things worse (net-zero delay, second staircases, HS2, infrastructure levy, political posturing, to name just a few).
Housing starts are already falling off a cliff and the impact of the loss of jobs in the construction sector could be immense, let alone the further supply and demand imbalance we will see in a few years’ time.
So, why the optimism? Well, firstly you don’t join this industry if you aren’t of an optimistic bent! But – perhaps – the end is in sight? We are one year away from the end of the London & General Election cycle and there is belief that a (likely) new Government would start to provide the confidence boost, policy change and money that is needed. There have been adjustments to the new financial realities. And London does remain a magnet for investment and activity, still full of opportunities.
Our clients are pushing on and as an agency we are busier than ever. But how much of this turns into actual development activity over the next 12-18 months remains highly uncertain.
With business craving certainty, attention now turns to the two main parties at their conferences as the long pre-election period becomes real. As ever, LCA will be in Manchester and Liverpool, and staying on top of all of the issues that impact the sector. ”
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DOWN IN LONDON TOWN
WHEELS DOWN: The Mayor returned from his trip to New York to a full in tray, with policing once again back at the top of the pile.
On board: Last Friday, Khan unveiled the new London Policing Board membership, made up of academics, former senior officers, representatives of civil society and the brother of Stephen Lawrence – plus figures from across London’s government.
Casey’s legacy: As a reminder, the policing board was a key recommendation in Dame Louise Casey’s report into the failings in the Met Police. On announcing the members of the board, the Mayor refused to rule out breaking up the Met if reforms fail.
Thin blue line: Not everyone is happy, with some questioning the appointments being in the gift of the Mayor. Tory Mayoral hopeful Susan Hall accused Khan of having “nobbled the policing board, adding in some of his Labour activist friends and excluding anyone who might cause him problems”.
Down weapons: Following the board’s unveiling, events moved quickly over the weekend, after news that the Crown Prosecution Service (CPS) had charged with murder the Met Police officer who shot and killed Chris Kaba in Streatham last year. In response, some armed officers reportedly handed back weapons leaving a gap in the Met’s capabilities, with the Army on standby to assist.
Emergency response: The Home Secretary, Suella Braverman, turned up the political temperature by ordering a review of armed policing. This isn’t the first time we’ve seen what it means for the Met to have two political bosses with sharply opposing views. The Home Secretary’s actions drew some criticism for interfering in an ongoing criminal case, albeit the review gained the support of the Met Commissioner, Sir Mark Rowley.
Pidgeon’s Treat: Elsewhere, Liberal Democrat Assembly Member and former Mayoral Candidate, Caroline Pidgeon this week called for the creation of a London Parliament. Pidgeon, who is standing down next May, argued in a speech at the party’s conference in Bournemouth that a parliament “with real power, including over raising and spending money would serve as a powerful force to drive forward London”.
Conference Hall: Meanwhile, the Tories head to Manchester next week for their annual party conference – the first gathering for Susan Hall as the Conservative’s candidate for Mayor of London.
Flashing blue lights: Hall will go into conference buoyed by a new poll that puts her just three points behind Khan. Interestingly, when undecideds are stripped out, Labour and Tory figures are broadly what both parties received in the first round in 2021.
Sidelined? But there are rumblings Hall isn’t being given the chance to speak in the main conference hall, instead shunted into a London-themed fringe meeting. With her predecessor having spoken from the main hall, is this an indication of the Tory leadership’s lack of interest in the race for City Hall? LCA colleagues will be in Manchester to report back on the latest developments.
LONDON PLANNING ROUNDUP
- The Secretary of State has rejected both of Great Portland Estates’ plans for delivering an office-led scheme by London Bridge. GPE developed two designs for ‘New City Court’, the first of which, for a 37 storey building, was submitted to Southwark Council in 2018, with objections made over the scheme’s height. GPE submitted a second design in April 2021 at a lower height of 26 storeys, but Southwark were unable to make a decision, leading to GPE appealing both designs. Both plans contained 47,000 sq m of offices and a new entrance for London Bridge Tube station.
- City AM has reported that Greenwich Council has ordered Comer Homes to demolish its two completed residential towers at Mast Quay, Woolwich, due to their construction without planning permission. Following investigation, the council found that Comer Homes had deviated 26 times from original designs approved in 2012, including visible design changes, different cladding installed and less residential space. Comer Homes have 28 days to appeal the decision.
- PBBE Mark Lane’s plans to deliver an 11-storey 25,600 sq m office building at Tower Hill have been approved by the City of London following Stage 2 approval from the Mayor of London. The developer will demolish buildings on the 0.32 ha site, including two offices and a pub, to nearly double the current amount of floorspace currently available.
- Yoo Capital has unveiled its plans for the refurbishment and restoration of Grade II-listed Saville Theatre on Shaftesbury Avenue, which is currently operating as an Odeon cinema. The developer intends to convert the 110,000 sq ft venue into a live performance space, along with adding dining and a boutique hotel.
Cllr Caroline Woodley has been announced as the Labour Party’s candidate in the Hackney mayoral by-election. Cllr Woodley is currently the Cabinet Member for Families, Parks and Leisure.
Opportunity London has appointed former Chief Executive of New West End Company, Jace Tyrell, as its new Chief Executive.
Therme Group has appointed Professor David Russell as its first UK Chief Executive.
Rob Whiteman, Chief Executive of the Chartered Institute of Public Finance and Accountancy (CIPFA), has announced his plans to retire in June 2024.
Former Chief Investment Officer at Homes England, Gordon More, has been appointed as Senior Strategy Adviser to the Housing Growth Partnership.
Build UK has appointed Managing Director of D-Drill & Sawing, Julie White, as its new Chair. White takes over from Chief Executive of ISG, Paul Cossell.
BLUE WALLS AND SANDCASTLES
A SUNNY MOOD: The Liberal Democrats’ annual party conference has concluded in the seaside town of Bournemouth. Riled up by election fever and a run of successful by-election results, the Lib Dems were in a campaigning mood. In his closing address, Sir Ed Davey vowed the party would demolish the Conservative ‘Blue Wall’ in the south of England.
Room to grow? Housebuilding became the big topic of conference with the party’s youth wing Young Liberals triumphing in their tabled amendment to keep the Lib Dems committed to building 380,000 homes a year. The leadership, no doubt mindful of the unpopularity of the policy in a swathe of Tory target seats across the south, were keen to distance themselves from top down housing targets.
Art of persuasion: The Young Liberals tapped into every Lib Dem campaign tactic at their disposal – namely some strong leafleting and t-shirt action. Former Leader of the Lib Dems, Tim Farron, criticised the amendment calling it ‘pure Thatcherism’ and a ‘gift to the Tories’ as they face voters on doorsteps at the Mid Bedfordshire by-election.
Age over beauty: Young Liberals said they were being ‘ignored and let down’ by the party’s leadership. Nevertheless, the symbolism of a frustrated group of aspirational young people facing down opposition to new homes is hard to avoid.
(Door) Knockers to Europe: The party’s anti-Brexit stance was also an undercurrent through the conference, although Ed Davey stated that rejoining was off the agenda and will be a ‘long-term thing.’ Activists from the European Movement made sure it was very much still a current thing, placing pro-EU door hangers on Lib Dem officials’ hotel room doors.
Coalition of chaos? Despite being locked in a ‘messy’ by-election campaign in Mid Bedfordshire, the possibility of a potential post-election pact between Lib Dems and Labour came up for discussion. Davey said he would not ‘speculate’ over anything other than beating the Conservatives in a very deliberately-worded ‘maybe’.
Not out (yet): The last ten days has seen the Prime Minister Rishi Sunak come out fighting with a flurry of policy announcements and briefings, backed by rumours and speculation.
The tail is wagging: It’s been termed ‘political Bazball’ after the swashbuckling, high energy approach adopted by the England cricket team, and is the latest attempt by the Tories to regain the initiative.
Change of pace: The burst of energy includes watering down net zero commitments, floating a further ban on smoking, charging £10 for missing GP appointments and replacing A-Levels and making maths and English compulsory to 18.
Top spin: Much speculation surrounds the future of HS2, with little attempt by No 10 to downplay fears that Phase 2 Birmingham to Manchester and the Euston connection will be ditched.
First slip: Cancelling a high speed rail line to Manchester a week before your party arrives in the city for their annual conference isn’t a good look. Unsurprisingly there’s been some rowing back and now any decision on HS2 looks likely to come later in the autumn.
Hostile bowling: Although Lord Hague has come out to bat for Sunak, he has come under sustained attack from (amongst others) Boris Johnson, George Osborne and Michael Heseltine, business groups, and has united Metro Mayors and even the US owner of Birmingham City FC.
Cover drive: Also being mooted is reform of inheritance tax, an announcement that always has the feel of a ‘break glass in case of emergency’ policy for the Tories when times are really tough.
Silly Mid Off: The Prime Minister’s approach has certainly raised eyebrows. Whether he’s swinging and missing or whacking the ball to the boundary is yet to be seen. Some polls have suggested that the strategy might be having an effect, but with three by-elections coming up, two of which are Tory held seats (Mid Bedfordshire and Tamworth) Labour is desperate to nab, it could still prove to be a difficult few weeks ahead for the Prime Minister.
- LCA client London Property Association’s new report on the impact of the Elizabeth line on central London’s office economy.
- The FT’s Jim Pickard and Robert Orr’s guide to the best pubs in the West End.
- Bloomberg’s feature of the soon-to-be ‘super sewer,’ the Thames Tideway.
- The Evening Standard’s Leader podcast on flexible working and the future of London.
- Mind the gap? The BBC’s deep dive into London’s infamous Necropolis Railway.
- A history of London’s blue plaques as its 1,000th commemoration is unveiled.
- The NLA’s latest report ‘Housing Londoners’ on promoting innovation and community engagement in tackling the capital’s housing crisis.
FANCY A TRIP TO THE REAL-LIFE Q BRANCH?
This week LCA helped newly formed ‘The London Tunnels’ launch its vision to open to the public for the first time the mile-long subterranean tunnels under High Holborn that inspired James Bond’s Q branch.
Originally built to shelter Londoners during the WWII Blitz, although never actually used for this purpose, the tunnels became home to the Special Operations Executive in the 1950s, where author Ian Fleming worked at the time. Dramatically enlarged by the British Government at the start of the Cold War they have since housed the Transatlantic telephone line that acted as the ‘hotline’ between Moscow and the White House during the Cuban Missile Crisis, and at one point supported up to 200 staff – including with what remains the deepest licensed bar ever in London.
Having been subject to the Government’s Official Secrets Act for nearly 70 years, the team now plan to turn these tunnels into one of the world’s most captivating cultural experiences exploring history, nature and the arts, and capable of welcoming two million people per year.
LCA provide all five of our core services to The London Tunnels and project architects, Wilkinson Eyre (both LCA clients). So far we have helped secure a range of national and internal press coverage (including Bloomberg, The Times, Time Out, El Pais and South China Morning Post to name a few), and we now look forward to continue to work with the team as we engage local community and political stakeholders over the months ahead.
Read more about the tunnels here.
Photo courtesy of London Tunnels Ltd
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