Will London Bridge's Shard Artfully Dodge a Double Dip?

Published: 25/07/2012 By Jane Robathan

The Skyscraper Index, created by economist Andrew Lawrence in 1999, accurately reveals how the rise of the world’s largest and most lavish skyscrapers have uncompromising links with overspent economies. Essentially, the index proves that skyscrapers go up as economies fall.
 By tracking boom and bust cycles from the end of the last century when skyscrapers first appeared, Lawrence proves his concept time and time again. Think of Philadelphia City Hall, which sprung up prior to the US stock market crash of 1901. The Empire State Building, 40 Wall Street and the Chrysler Building all rose just before the Great Depression.  London’s Tower 42 forewarned the eighties recession in the UK, while One Canada Square was completed in 1991 yet succeeded by global recession during the early 1990s.
 One Canada Square (often mistakenly called Canary Wharf) was previously Britain’s tallest skyscraper at 770ft. Yet its commercial offices were first fully let by 2003, 12 years after completion. Standing at 1016ft tall, the Shard is open for business at a time when the eurozone is drowned in unsustainable debt and a UK double-dip recession has been confirmed, so will it take as long to fill?
 Baron Phillips, a spokesman for London’s newest and tallest building, spins the positives well: “We’re very confident about gaining tenants as this is such an iconic building. A lot of people would love to have the Shard address and it appeals to the widest variety of businesses and tenants possible.”
 Although it has yet to fill most of its commercial space, Phillips says they are in “negotiations with a number of serious parties” and are pitching office space from £55-70 per sq ft, depending on the size and position of units.
 Back in May, Reuters reported that Qatari-owned broadcasters Al Jazeera television were in serious negotiations to take over 30,000 of the available 589,602 sq ft of commercial space, although Phillips’ lips are closed tight on the matter. What’s certain is that the five-star Shangri-La hotel chain are taking floors 34-50 in this upper part of the tower and that no other space has yet been taken. Irvine Sellar, the multi-millionaire behind Sellar Property, insists he is being very selective about prospective tenants and expects the Shard to take just two years to fill.
 Having already suffered a financial crisis of its own, the Shard forged forward during the first part of the UK’s credit crunch. Sellar Property had run out of investors by 2007 but was thrown a lifeline by oil/gas-rich Qatar, who funded 95% of the build and gained an 80% stake in its future wealth. Although the building is not accessible to the public until next year, a committed PR team have ensured a timely inauguration (with corresponding column inches), just before London’s Olympic Games kick off.
 In the economically heady days of 2004, all floors were already leased when 30 St Mary Axe (the Gherkin) opened. Three years later, the Gherkin sold for (a then) record price of £600 million. This was all happening as the Shard was being designed and having its plans infamously approved.
 English Heritage and the Royal Parks Foundation both rejected architect Renzo Piano’s design but were thwarted by John Prescott’s push into a planning inquiry in 2003. As the Gherkin was blooming and booming, Prescott’s insistence to get the Shard up, with the new promise of Middle Eastern backing, seemed based on New Labour’s boom-business sense.
 Hopefully, the worst is behind it and the Shard is now on schedule to open for business when the UK financial market is forecast to improve next year. “Even if we sign up a tenant today” says Phillips, “the office fit-out would probably take us into a move-in in the New Year.”
 When finished in February 2013, analysts suggest the 10 super-exclusive apartments at the top will be priced from £30-50 million each. These figures are based on the square footage of London’s most expensive apartment block, One Hyde Park (also owned by Qatar) and far exceed prices currently attainable in London Bridge. If super-rich foreigners continue to buy prime London property at the rate they are today, it could just be the making of the Shard.