High rise boom short-lived

A FRANTIC construction boom in London is keeping City firms busy with a flurry of redevelopment work. However, there are concerns that this boom may be short-lived.

City firm Gouldens has recently advised on a u200m redevelopment scheme for Paternoster Square.

Craig Shuttleworth, partner at Gouldens says: “We are very busy in the construction department and there is definitely an increase in work.

“A recession was looming only a few months ago, with projects being committed and not followed through.”

Michael Smith, construction partner at Ashurst Morris Crisp, agrees: “The industry is holding up remarkably well in the City, considering the economic pressures.”

However, Chris Hogan of Baker McKenzie warns: “The boom is not likely to sustain itself.”

Ann Minogue, partner at Cameron McKenna, supports this view, saying: “The market is nothing like the late 1980s, where there was a large amount of speculative construction resulting in vacant space around the City.”

Camerons is currently involved in at least three lottery projects and is “fanatically busy” says Minogue. She also explains the upsurge in the construction industry as partly due to an under supply of new space and lottery money being injected into capital projects.

A senior construction industry source believes that other external factors are also at work: “Prior to the introduction of the euro, there was trading on a national scale in various European countries. Now, there is trading by sector, resulting in consolidation.”

He adds: “The amount of space occupied is now significantly different. Instead of several small offices around Europe, there is now a single large office in London.”

Michael Blackburn, a construction litigator at Berwin Leighton says: “There has been substantial growth in the City compared to the first half of the 1990s. There was less pre-letting then, compared with the position today.”