Cluttons - General Other - South Bank Update

Date: 25 Sep 2001

The latest research report from Cluttons warns of a potential oversupply situation on the South Bank if all of the developments with planning consent actually go ahead. According to the Summer 2001 South Bank Update, there is currently over three years worth of supply in the development pipeline.

The research outlines a full development programme, with over 152,728 sq m (1,643,964 sq ft) at planning application stage and more than 265,000 sq m (2,852,460 sq ft) with planning consent which is the equivalent of more than three years worth of take up at current levels. In addition, construction activity remains high with over 61,000 sq m (658,606 sq ft) currently underway.

Also highlighted in the research is weakening demand, increasing availability and falling prime rental values which was predicted in the Spring 2001 Update. Top rental values now stand at £431 per sq m (£40 per sq ft), a figure that Cluttons believe is more realistic than the £484 per sq m (£45 per sq ft) peak achieved earlier in the year.

Total available space increased by 33% since the Spring Update and now stands at 35,920 sq m (386,643 sq ft) due to the general weakening of demand.

However, take-up actually increased over the same period with over 100,000 sq m (1,076,400 sq ft) being let, although, 76% of this came from just two lettings - 40,735 sq m (438,472 sq ft) at More London, London Bridge and 36,245 sq m (390,141 sq ft) at Sampson House, 64 Hopton Street. Grade A supply remains limited with just 7,786 sq m (83,808 sq ft) on the market.

Commenting on the findings research analyst Melanie Bayliff of Cluttons Central London Business Team said:
"There is a real risk of oversupply in the next 2-3 years if all of the schemes in the development pipeline go ahead. However, we believe it is more likely that some schemes will either be postponed or abandoned to avoid such a situation."

The research report goes on to highlight the planning consent, which was granted for the proposed Jubilee Bridge scheme, which is expected to cost approximately £14m and take around 10 months to build. The covered bridge would create a shortcut from London Bridge to Cannon Street and open up the South Bank area further. In addition, Cluttons also commented on the Sellar Property Group who finally submitted a planning application for the controversial 306m (1,006 ft), 80-storey tower.

Also highlighted in the research, was Chelsfield's plan to develop a 9,290 sq m (100,000 sq ft) office and retail scheme at 135 Park Street as part of an investment initiative for the area. The scheme is thought to have an end value of approximately £50m and will consolidate Chelsfield's position as one of the South Bank's bigger landlords.

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