Onwards and upwards: the rise and rise of Southwark's real estate fortunes
Walk around the London Bridge area at almost any time and you’ll see office workers, tourists and local people happily rubbing shoulders. The News Building next to The Shard houses the London office of News UK, which as a 24/7 business, means there is always someone coming or going to work. Add to this the night culture and night-time economy of cool, independent food and beverage offerings, and what you’ve got is a lively 24/7 location. It has a gritty cool that’s different to the refined cool of upmarket Mayfair and Fitzrovia.
Southwark's unique vibe is a huge draw
The range of people in the London Bridge and Southbank area creates a vibrancy that is difficult to capture anywhere else. You’ve got every different cut of London life here, from hipsters sporting skinny jeans and beards to office workers in suits and everything in between. And that’s the appeal. Occupiers who are trying to attract and retain the best talent or reposition their brand are attracted by the vibrant and less traditionally corporate environment that the area provides. It’s part of the reason many occupiers are moving into the area.
Southwark has a unique blend of amenities, transport, community and mix of business sectors that’s hard to beat. You have businesses like Omnicom, Ernst & Young, Lloyds Bank and News UK within walking distance of each other, all of which makes for an interesting and dynamic environment.
The business pioneers: from the City to the Southbank
The area has come a long way since its days as a cheap alternative to the City of London. Back in the late 1980s, there was no real scale development in London Bridge. So, when St Martins Property Group started the first phase of London Bridge City, it was a huge gamble, but one that paid off. It wasn’t easy though persuading people to move south of the river, but come they did.
The main incentive was the obvious pricing discount they could get by going 250 yards and over a bridge. Citibank, the Canadian Imperial Bank of Commerce and PwC were the pioneers of this move of south of the river. But it didn’t establish itself as a business location of a critical mass in this early phase of evolution so pricing went up and down depending on the cycle and market; it was very tidal.
In addition there was the first scale redevelopment of riverside warehouses for residential use at the Shad Thames that also attracted the likes of Conran and Le Pont de la Tour moved into the retail space on ground level, turning this part of the Southbank into a gastronomic destination.
The tide starts to turn with the Jubilee Line
The big turning point for me was the opening of the Jubilee Line extension in 1999. Suddenly, Southwark was easily accessible flow East and West, it had always had North and South connectively. Up until then, your movement from East to West was very limited – and a real pain if the Northern Line wasn’t behaving. Suddenly it became very connected across central London.
The Shard inspires commercial developers to think big
And then of course, after many years in the planning, designing and building, came The Shard. The late, and undeniably great, Irvine Sellar absolutely believed in London Bridge as a growth location in a new London hierarchy. Even then, it took a lot of confidence to build The Shard and what is now The News Building speculatively but it paid off. The Shard has given the area huge confidence and purpose. It’s almost as if people relaxed that someone had invested such a huge amount in such an iconic building it put the location on the map, not just in London but globally.
The success of The Shard has encouraged more investor/developer to look at large scale development in the area. Great Portland Estates for example have plans for a new tall building near St Thomas Street and you’re now seeing buildings proposals of significant scale across in Southwark and the Southbank.
It’s the next chapter in a long, proud history. London Bridge has always been a confluence point. The Romans built the earliest major crossing of the Thames here. In fact, Network Rail engineers working on the London Bridge Station redevelopment found the remnants of a bathhouse on Borough High Street back in 2011.
Talking of which, once the huge improvements at London Bridge Station are complete in 2018, there will be a 60% increase in rail capacity – with trains running every 2-3 minutes at peak times including Thameslink, providing a north-south metro-like service. London Bridge will become even more accessible to more people.
Southwark's future post-Brexit
We all know that financial services aren’t growing in London at the moment. The biggest growth opportunity both generally and in terms of commercial office space is the technology, media and telecoms (TMT) sector. TMT firms believe that London will continue to dominate as Europe’s tech hub. But will they be able to grow as quickly if and when the likely restrictions in movement of EU citizens come in? A lot of TMT’s talent comes from EU countries, and the UK alone simply cannot currently provide enough people with these skills to meet demand. It will be really important that government finds a solution to this in their Brexit negotiations.
Whatever shape Brexit comes in, Southwark is probably one of the most resilient markets if you look at things like vacancy rates, levels of development, and variety of employment types. What worries me about Southwark is the prospect of amenity gentrification. Where you see great little independent retail, food and beverage businesses being replaced by big chains the area loses part of its appeal. I hope all the owners and Southwark Council really work together to ensure this area retains its amazing variety of offer.
Where to next?
It’s interesting that most of the development has been at the London Bridge end. I think Waterloo is a long overdue opportunity. Almacantar are redeveloping the old Shell Centre and there’s planning permission for a 1.4 million square-foot office and residential at Elizabeth House beside Waterloo Station.
Further West you have Battersea Power Station development, which will benefit enormously from the Northern Line extension once it opens in 2020, as well as the huge kudos of having Apple’s UK HQ there. Apple will be a magnet for other creatives and has the potential to do for Battersea on a smaller scale what Google did for Kings Cross.
However, it’s going to be very difficult to give some of these places the authenticity that Southwark has. One of the major strengths of Southwark is that the past hasn’t just been replaced with glass and steel everywhere. You still have local housing and local people with some families have been there for generations. That is what makes Southwark – it’s the sense of community, the heartbeat of the place.