Despite talk of austerity, new developments are proving hard to resist for some clients

THE ARCHITECT behind the Gherkin, the now familiar bullet-shaped building in the City in London, recently declared that the era of the skyscraper in the capital was nearing its end.

According to Ken Shuttleworth, who led the team at Norman Foster’s firm, in the new age of austerity, clients are demanding cheaper and, yes, duller buildings than the landmark towers that started to appear on London’s skyline during the boom years.

But tell that to British Land, one of the largest commercial property firms in the country.

On Monday, the company announced that it had pre-let a third of its latest tower, dubbed the Cheesegrater, which is due to be completed in 2014. The insurer Aon will move into the 47-storey building.

The recession and especially the financial crisis brought the huge wave of building in the City to a sudden halt. Projects were mothballed and all the big listed commercial property firms – British Land, Land Securities and Hammerson – were forced to raise capital from shareholders through rights issues.

Recently though, schemes have again been given the green light.

In the autumn, Land Securities and Canary Wharf (in its first City development) began work on the Walkie Talkie, a 36-storey building that has an hourglass shape and has been designed by Rafael Violy.

A consortium of Middle Eastern money is pressing ahead with the 63-storey tower officially known as the Pinnacle, but better known as the Helter Skelter.

Gerald Ronson has just completed the Heron Tower, which now looms over Liverpool Street, while the Shard on the South Bank, which will be the tallest of the lot, continues to reach breathtaking heights.

The Shard is also being built on the back of Middle Eastern cash.

Past evidence suggests companies will pay more to rent space in landmark buildings. The owners of the Gherkin have managed consistently to charge rates above average for the City and its example has cemented enthusiasm from developers to hire so called “starchitects”.

And the higher you go in most towers, the costlier the rent, suggesting 9/11 has not put people off skyscrapers.

The physical landscape of the City has altered dramatically since “Big Bang” in the 1980s. The newly computerised banks no longer needed to be in the shadow of the Bank of England. They spread out across the Square Mile and further into the derelict Docklands area.

A little over a decade ago, Canary Wharf still looked like a folly; today it is a thriving rival to the City, with 95,000 people occupying 15 million square feet of office space in 35 buildings.

A curious addendum is the fate of Broadgate, the vast 1980s office complex of “ground-scrapers” – low rise but big enough for huge trading floors – around Liverpool Street. The buildings sit in part around an amphitheatre used for ice skating in the winter and where pinstriped types let their hair down after hours during the summer before catching their commuter trains home.

British Land now wants to knock down two of these buildings and replace them with larger, bulkier developments as a new home for the investment bank UBS, but a row has erupted about their cultural significance, with English Heritage threatening to slap a preservation order on the development.

Shuttleworth in his own practice, Shuttleworth’s Make Architects, is behind the rebuilding plan.

But whatever the outcome of that particular row, the trend of building upwards looks set to continue.

Commercial property rents in the City have risen by about 60 per cent since the nadir of the recession and are again nudging £60 a square foot, close to the pre-crisis levels of about £66.

Threats of the financial services industry quitting London in the face of windfall taxes on bonuses and the climate of banker bashing have yet to materialise. And if the financial district continues to thrive, building higher is the most logical step – about one third of the City is listed (not including Broadgate) putting a significant constraint on new developments.

Speculation among analysts is that the announcement made by Aon will be a trigger for a rapid succession of leases to be signed up across new developments in the City. British Land is now said to be holding back the rest of the Cheesegrater in anticipation of rents going higher still.

David Teather writes for the Guardianin London