Construction Enquirer News Developer signals confidence in long-term prospects of London office market

Land Securities has signalled its confidence in the long-term prospects of the London office market by continuing construction of 848,000 sq ft across three schemes worth £957m.

The developer highlighted the option in May to pause work at ground level on some of its London schemes as it assessed the impact of Covid-19.

But in an update today Land Securities said work would progress on its three main office-led sites.

It said: “At 21 Moorfields, our 564,000 sq ft scheme which is pre-let in its entirety to Deutsche Bank, we are making good progress and productivity is at around 75% of pre-Covid levels.

“We now expect to reach practical completion in June 2022, four months later than the original programme.

“We are working with the main contractor to ensure onsite productivity improves to mitigate any further delay, and we continue to be in close dialogue with Deutsche Bank, who are finalising their fit-out modifications.

“At Lucent, our 144,000 sq ft scheme in the heart of the West End, we have completed the sub-structure and remain on programme to hand over to the main contractor in February 2021.

“At our 140,000 sq ft site at The Forge (previously 105 Sumner Street), we are on schedule to complete basement and piling works in December, after which we will start trialling our new modern methods of construction approach to manufacture with a ‘kit of parts’ frame.”

Chief executive Mark Allan said: “We are now progressing the speculative schemes that offer the best risk adjusted returns – Lucent and The Forge – in addition to our pre-let development, whilst retaining the remainder of our pipeline in a state of readiness to resume as and when the medium-term outlook for the market becomes clearer.”

“Longer term we remain confident in London’s status and prospects as a global gateway city.

“While Covid-19 has instilled a fear of densely populated areas in the near term, it is also increasingly highlighting people’s desire to come together, the challenges and limitations that emerge when they can’t and the significant network effects of mixing commerce, arts, science and power in one place. Cities, and London in particular, have bounced back from many such crises in the past and will do so again.

“As we emerge from the pandemic, the way employers and people seek to use office space will change as greater levels of remote working become the norm.

“Many of the trends of recent years – the importance of sustainability, greater levels of flexibility, the role of the workplace in a health and wellbeing context – will accelerate. Others, particularly the shift to higher occupational densities will slow or reverse.

“We believe this is likely to lead to a bifurcation in the market – demand for modern, adaptable, high quality space will increase; obsolescence of older, secondary stock is likely to accelerate.

“These are the sort of market conditions that should present opportunities for Landsec to create real value.”

Land Securities also announced its intention to withdraw from the hotel, leisure and retail park markets.

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