New life grows in the shadow of the tower : The Market : DOCKLANDS A SP ECIAL REPORT
The up-turn in the commercial property scene has not been confined to C anary Wharf. David Lawson reports on the growing market
Docklands has emerged as a bolthole for financial groups, squeezed out of traditional locations by lack of space or frightened away by IRA bombs. Ulster peace talks have eased the pressure but this could be more than balanced by companies who view the dwindling amount of new City space with growing alarm.
When Docklands was first turned into an alternative office location, the City responded by allowing more building. But investors have been slow to respond to the recent erosion of supply in central London. The Jubilee Line has also finally spurred companies into considering moving out.
Jones Lang Wootton charted active demand for more than 2m sqft of space and almost 3m sqft of potential inquiries late last year. If the big lettings to BZW and Morgan Stanley in Canary Wharf go through, JLW says this would cut the vacancy rate to 30 percent compared with 46 per cent in December 1993.
"We have had more people down here asking about sites than for the last five years," says Mike Bignall, development director for the London Docklands Development Corporation.
He is talking to three groups looking for sites to build between 50,000 and 250,000 sqft of space they feel they will not be able to get in the City. And Canary Wharf is not a second-best option.
"They want distinct buildings with their own identity rather than disappearing into a big complex. They also feel current land prices are good value," says Mr Bignall.
Sites being inspected include four acres on Poplar Dock and about 1.5 acres on Millwall Dock. Companies realise they have to look now because once the handful of LDDC sites are gone there will be little left of any quality. They must also harden up plansnow to have a chance of moving in by the time the new tube line opens in 1998.
One site on East India dock, near the Financial Times printing works, could be taken off the list if NCC takes up an option to purchase, following up its existing office development.
Owner-occupiers are leading the hunt. Franklyn Mint took advantage of rock-bottom prices to buy and convert 105,000 sqft of South Quay, taking 40,000 sqft for itself and probably farming out the rest. Financial groups are the big players, however. They need dealing floors and deeper office space than they can get from developers.
Retailers and hotel operators are also active. Apart from the massive Royal Docks plans there are proposals to review 1.2m sqft of retailing at Gallion's Reach near the aborted East London River Crossing. Property Securities Investment Trust should be onsite this year with a scheme for a 105,000 sqft retail park near the Surrey Quays Shopping Centre.
Southwark Council has a scheme for a leisure complex with London & Bath Properties at Canada Yard and at least a couple of hotel operators want to get into Docklands now it is filling up with businesses which need visitor accommodation. Whitbread is alsoworking on a bed-and-breakfast-style scheme at Beckton, which is well placed for the M11 link.
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