“We’ve partnered with the London 2012 Olympics and Paralympics organizing committees to help make the upcoming games the greenest in history,” said Reuben Arnold, head of commercial development for Eurostar Group Ltd., as he sat in Eurostar’s Business Premier Lounge at London’s St. Pancras International Station.
Eurostar has operated high-speed rail service between London, Paris and Brussels since 1994, and passenger traffic to London has never been better. At St. Pancras, where the sleek Eurostar trains offer frequent service to and from the Continent, business and leisure travelers arrive throughout the day, shunning the stressful security procedures, heavier carbon footprint and weather delays of flying for the comfortable, two-hour Chunnel train ride from Brussels or Paris.
London, Europe’s financial and cultural capital, is more popular than ever, with business travel increasing 21 percent in the third quarter of 2010 and overnight visits to the city increasing 8 percent in the same quarter. London’s selection as host city for the 2012 Summer Olympic Games, as well as eased construction restrictions, has created somewhat of a frenzy in the city’s commercial real estate market. More than $17 billion of investment will flow into the capital between 2010 and 2012, funding a range of development projects throughout the city. With unemployment and real estate prices still in the doldrums in most of the U.K., commercial square-foot building costs in London have returned to pre-2008 levels, and the high costs are attracting only the largest, most heavily bankrolled private investors. Walk across the street from St. Pancras and you will be in the middle of the King’s Cross redevelopment project, one of the city’s largest urban renewal efforts.
King’s Cross, a formerly deprived city-center neighborhood once known for drugs, prostitution and a shabby but busy 1863-era Underground station, is being transformed by private developers, at a cost of about $122 million, into the 67-acre King’s Cross Central, one of London’s most progressive mixed-use communities. With world-famous architects like David Chipperfield, Stanton Williams, David Morley, Allies & Morrison and Porphyrios Associates contributing to the design of 50 new buildings and the restoration of 20 historic structures, the complex will include 4.9 million square feet of office space; 50 arts and music venues; 2,000 new residential homes and apartments; 500,000 square feet of retail space; and 25 acres of green space. The campus of the University of the Arts London is expected to welcome 4,500 students and staff this fall; and residential and commercial tenants will begin moving into King’s Cross Central in 2012–2013, most likely led by the U.K. office of Google.
Developers are also continuing to build aggressively in South Bank, near London Bridge. With a spire that reaches 1,016 feet (equivalent to 87 stories), the skyline-piercing, glass-paneled, Renzo Piano-designed building called The Shard (as in a shard of glass) will be Europe’s tallest commercial building when completed in summer 2012; it will include office space, upper-floor residential apartments and a deluxe Shangri-La Hotel.
Another massive development project is taking place in East London, where Queen Elizabeth Olympic Park is under construction in the urban suburb of Stratford in preparation for the 2012 Summer Olympics. Located east of Canary Wharf, a relatively new financial center opened in the early 1990s, Stratford is a poor, working-class district that hopes to be revitalized because of its selection as the main 2012 Olympic venue location. A “prosperous, vibrant new piece of city” is what the Olympic Park Legacy Company is touting in its colorful marketing materials.
Constructed on 250 acres, QEOP will result in five new neighborhoods, four miles of landscaped waterways and five new Olympic sporting venues, including the 55,000- to 80,000-seat Olympic Stadium, all within 10–15 minutes of central London by high-speed rail link. With 34 percent of the 11,000 new homes devoted to affordable housing and a planned list of 11 schools and three health centers — along with new office parks, restaurants, hotels and the world’s largest McDonald’s — it is expected that by 2020 QEOP will become one of London’s top five visitor destinations.
There are also plans in Stratford for a new technology hub that will be developed in the post-Olympics QEOP. Launched by U.K. Prime Minister David Cameron and London Mayor Boris Johnson in November 2010, the aim is to link the rapidly growing cluster of digital firms in Shoreditch, also called “Silicon Roundabout,” located just north of London, with the high-tech companies moving into QEOP. According to Prime Minister Cameron, Vodafone, Google, Facebook, Intel and Cisco have committed to investing in Tech City East, the working name of the planned project.
The 2012 Olympics has its detractors, of course, including critics who say that too much money is being spent on the venues, but generally it is progressing with few major problems. The Zaha Hadid-designed Aquatics Centre, located in QEOP, is a beautifully conceived building that will become part of the new Olympic Park residential community after the events for use as a community swimming center. Most of the 34 event venues are located within the London metropolitan area, including some well-established sporting venues like Wimbledon (tennis), Hyde Park (triathlon), Earls Court (volleyball), the ExCel Exhibition and Conference Centre (boxing, fencing, weightlifting) and the new Wembley Stadium (soccer).
The Olympic Delivery Authority has taken great pains to reduce the Olympics’ carbon footprint, acutely aware of London’s propensity during the past decade to cut its carbon emissions, including limiting the number of vehicles allowed to enter the City of London during peak commuting hours. The ODA directed all venue designers to use lightweight and energy-efficient materials in the construction process.
Although many of London’s residential neighborhoods are too pricey for British middle-class families, brokers have no trouble selling multimillion-pound homes to well-heeled overseas property buyers and upper-class Londoners moving back to the city from quaint country villages in the distant suburbs. Paddington, with its high-speed rail service to Heathrow, is a popular neighborhood for international executives, many with company-paid housing allowances. Nine Elms is a planned residential community near the 1930s-era Battersea Power Station. Set along the Thames, its master plan was designed by Rafael Viñoly, a New York-based architect who used the renovated, iconic power station as its hub. The U.S. Embassy is expected to move to the area in five years, just about when the district will become one of the most sought-after residential and corporate locations in London.
A new, 1.5-mile greenway, now under construction, will be available for hikers and bicyclists traveling to Olympic Park beginning in early 2012. When London’s environmentally friendly mayor, Boris Johnson, suggested that the city make it easy for residents and visitors to bike around London, it did not take long for a service to begin. Just over a year old, London’s Barclays Cycle Hire (http://www.tfl.gov.uk/roadusers/cycling/14808.aspx) opened docking stations all over the city and has already accounted for more than 6 million bike rides through the city.
London’s first major retail destination, One New Change (http://www.one newchange.com), offers 220,000 square feet of shops, bars and restaurants near St. Paul’s Cathedral. Its Madison Restaurant roof terrace has great views across the city.
The fabulous London Eye (http://www.londoneye.com) is an amazing visual experience, and by early 2012 all its capsules will have been overhauled and refurbished. The historic Cutty Sark Tea Clipper (http://www.cuttysark.org .uk), the fastest and greatest of the old tea ships, reopens to the public at the end of 2011 in nearby Greenwich. At the Tate Modern (http://www.tate .org.uk/modern), the first substantial exhibition in the U.K. of works by artist Damien Hirst will take place April 4–Sept. 9, 2012. A new addition to London’s skyline will be Tate Modern 2, designed by Herzog & de Meuron and adding gallery space and visitor services to the already popular South Bank museum.
CHECKING IN WITH MAT OAKLEY
Director of Commercial Research, Savills Grosvenor Hill, global real estate services
DID LONDON EXPERIENCE THE SAME REAL ESTATE ‘BUBBLE’ BURST THAT AFFECTED THE WORLD’S MEGA-CITIES IN THE LATE 1990S?
In the late 1980s, many U.K. and international companies were taking on massive operations in London, so developers were building huge amounts of space in downtown London. When the markets crashed in the late 1990s, developers were left with tremendous amounts of unsold office space or sold space that tenants could no longer afford. That, of course, depressed prices, and sales were soft until the economy, at least here in London, picked up in the last few years. Now developers are once again moving forward with several new big projects.
TELL OUR READERS ABOUT THE NEW COMMERCIAL PROJECTS IN LONDON.
One of the biggest new projects is The Shard, on the South Bank of the Thames, which includes 600,000 square feet of offices, a hotel and residential apartments. Two new buildings — 122 Leadenhall Street, known as the “cheese grater,” and 20 Fenchurch Street, known as the “walkie-talkie” — will be starting construction shortly. Each one will be about 40 stories tall and include close to 600,000 square feet of office space. Perhaps the largest commercial project in the U.K. is the Pinnacle, which has already started construction, with plans for 1 million square feet of mixed office and retail space. And, of course, the biggest mixed-use project right now is King’s Cross. It will be an entirely new urban quarter, with a mix of well-designed office space, large amounts of residential housing, a new university and many shopping venues. It is also within walking distance of Eurostar’s high-speed train to Paris and Brussels, a major incentive for international firms. There is also talk about decking over Waterloo Station for another mixed-used development on the South Bank. The area around Paddington has proved especially popular with multinationals, including the American Express Co., which likes the area’s convenient rail link to Heathrow as well as its proximity to Central London.
WHAT IS HAPPENING WITH CANARY WHARF, WHICH BROUGHT RESIDENTIAL AND DEVELOPMENT PROJECTS TO LONDON’S EAST END IN THE 1990S?
Canary Wharf, the most talked-about real estate news item in the 1990s, is still an important market, especially among the finance and banking sector; and the area has drawn many new restaurants, hotels and residential development. This belt of development is also extending further east with the regeneration around the upcoming Olympic sites in Stratford, including a major new shopping center; new offices; and the Athletes Village, which Savills is marketing to developers for private and affordable housing. A new high-speed rail station in Stratford will open in time for the Olympics and will serve the community afterward.
Info To Go
Four airports serve London. The largest, Heathrow (LHR), is 30 miles west of London. Transport to downtown is by Heathrow Express train (15 minutes, about $29), Heathrow Connect (26 minutes, about $14), Underground train (45 minutes, about $8) and taxi (30–60 minutes, about $80–85). The Heathrow Central Bus Station, between Terminals 1 and 2, is open 24/7, with local routes to West London. An Oyster Card (one-day cards begin at about $11) is the easiest way to access London’s public transport network. For more information, visit www.visitlondon.com.
Just the Facts
Time Zone: GMT
Phone Code: 44 United Kingdom, 20
Currency: Great Britain pound
Entry/Exit Requirements: U.S. citizens
Key Industries: Banking and financial
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