Office rents fall in times of recession – nothing new there. But beneath the headlines there’s something else going on – rents in many of the UK’s small towns and suburban centres are falling disproportionately and a gap is opening up that is an insidious, long term symptom of decline which is easy to miss in the grand sweep of worldwide economic recession. What’s more that gap shows no sign of healing.
Take London and its suburbs for example – and check this out in the GLA’s LOPR ‘09 report. Campus-style developments around the periphery of Central London, from Broadgate to London Bridge City and Paddington to the prospect of King’s Cross, have sapped potential demand from the suburbs. The role of the suburb as a low cost alternative to the centre has been usurped by a new generation of smart, convenient workplaces.
This is not to dismiss all suburban London office centres. West London is, and will remain, the primary location for office development in Outer London. Its key markets have critical mass and vibrant commercial centres. There are a few other isolated centres that have developed robust markets.
The problem is that there are simply too many of these locations to justify the limited demand that might exist for relocating out of Central London and they compete head on with each other in a way that is potentially damaging to all. Add to this the prospect of future development at Earl’s Court, Brent Cross, Wood Wharf … the list goes on and the sheer scale of competition is daunting.
We must take a view of the ‘bigger picture’ – in this case the London-wide perspective. Local councils should put their heads together to identify the most suitable clusters for commercial development, which might straddle borough boundaries. Then they could release other land for more suitable alternative uses. They could ‘swap’ uses across borough boundaries.
Who knows, if Westminster/Kensington and Chelsea and Hammersmith and Fulham can learn to share resources, perhaps they can see the benefits of greater collaboration in other areas too. Perhaps LEPs are the key. I hope so.