London is in need of new quality housing and the government continues to urge developers to build new homes and repurpose existing properties into residential space. But with every spare inch being snapped up for housing, the supply of new office space is under increasing pressure.
In central London, this struggle is conspicuous. As the district is squeezed for residential space, the supply of office space shrinks, making it difficult for companies to gain and retain a foothold in London. Moreover, following the 2017 revaluation of business rates, many firms in established business districts, like Canary Wharf and central London, have faced higher business rates, forcing them to consider alternative destinations. The result is that businesses are increasingly being forced out of the City to make way for new homes or simply because the costs of business have grown too high.
This is alarming. If London is to retain its allure to investors, executives and young talent as a world-class business centre, the creation of attractive new hubs for business activity is of paramount importance.
In 2013, Chinese property development company ABP announced the launch of an ambitious £1.7bn redevelopment project in Royal Albert Dock. The firm seeks to create a new international business district in East London, taking advantage of the area’s advantageous location and scale. Allsop has been appointed as consultants to ABP to consult a range of stakeholders on business rates at various stages of the project, providing advice on business rates at the construction stage, during vacant periods as well as advising purchasers and occupiers later in the development lifecycle. The new business park could be one of the solutions to the pressures faced by businesses in need of space.
The creation of an international business district requires a significant amount of vacant space and developed infrastructure, both of which are in abundance at Royal Albert Dock. Its existing transport links will allow future tenants to get to the City of London in under 20 minutes, and London City Airport can be reached within five minutes by road. Furthermore, with the Elizabeth line’s arrival at Custom House, Liverpool Street station will be less than 15 minutes away and getting to Heathrow will take as little as 46 minutes.
The availability of reliable local and international infrastructure is crucial in determining the attractiveness of the new hub, particularly as many of Royal Albert Dock’s occupiers are expected to be frequent travellers, working between time zones. ABP expects the centre to become a magnet for local talent, a large proportion of which resides in East London, making Royal Albert Dock a location of choice.
The finished development will comprise 4.7 million sq ft of mixed use space, including office, retail, residential and public realm, set along a 2 km-long waterfront. Royal Albert Dock is designed to appeal to both local and international businesses, at different stages of growth, thanks to its attractive pricing, with rental and operating costs 70% lower than in the West End, allowing companies to focus on growth and investment. According to estimates, the new business district will help create 30,000 jobs, bringing £6bn to the local economy.
This project is a welcome response to the changes in the workspace market. Not only is there pressure on available commercial space caused by the housing shortage in west and central London, but the office rental values in those areas do not encourage new development. As a result, low-value employment space, ideal for growing start-ups, often gets repurposed, pushing occupiers to look for alternatives elsewhere, which encourages firms to move eastward.
The findings of the London Office Policy Review 2017 support the observation that occupier mobility has been increasing, particularly from west to east London, which can often offer businesses high-quality spaces, good connectivity, more attractive rental terms and lower business rates.
Royal Docks can be part of the solution to the overcrowded office space market of west and central London, creating opportunities not only for those in need of offices, but also retailers, and those looking for a new home.