Falling rents delay plans at Cheesegrater
Analysts yesterday said they were not surprised by British Land’s decision to postpone the development of its flagship City skyscraper, the “Cheesegrater”.
The developer, which saw the value of its portfolio slide by 5 per cent to £6.3bn in the three months to June, said it now expects the 225 metre tower in the heart of the City to be completed by 2012.
Soaring commodity prices and plunging tenant demand has forced the property giant to delay the Richard Rogers-designed Leadenhall tower.
Originally the project was on course for completion by 2011 but the group hopes that the delay will allow steel, glass and cement prices to fall back to cheaper levels.
Mike Prew, analyst at Lehman Brothers, said it was a “prudent move”. “This is a very prudent, strategic adjustment. It is a sensible delay given the pricing pressures on commodities and the weakened rental market,” he told CityA.M.
Chief executive Stephen Hester said yesterday he wanted to minimise costs of the £290m scheme, adding he would be retendering construction contracts, on predictions that commodity prices would fall over the next year.
British Land reported a first quarter pre-tax loss of £565m.
City Views: Are you happy that the credit crunch is causing some skyscrapers to be shelved or delayed?
Ketul Desai (Alliance & Leicester): “I think it’s a pity. London needs more skyscrapers, and it definitely looks better with tall buildings. It is a financial city, why wouldn’t you want to see skyscrapers in one of the world’s leading financial districts? Indeed, my favourite building in town is the Gherkin.”
Aima Ahonkhai (Kirkland & Ellis International LLP): “I have to say I don’t really mind. I guess most financial districts have skyscrapers, so I don’t see any problems at all with building new ones. However, I am happy to hear that the construction of the Cheesegrater is being shelved. I think it was really ugly.”
Jo Luton (A Lloyd’s Broker): “Probably this is one of the few good side effects of the credit crunch. There are far too many skyscrapers, and the newer the buildings, the taller they are. Old, historical buildings, even wonderful ones, are being overshadowed by this indiscriminate construction of new buildings.”