Dublin is not the only capital fast running out of office accommodation. The City of London, if one were to take estate agents at their word, is facing a severe shortage of prime office space. Investment bankers, however, viewing the City from the vast expanses outside the windows of their top-floor dining suites, might come to quite a different opinion.
From these heights, in almost any direction, one is struck by the large number of cranes at work. And cranes mean only one thing, new buildings coming on to the market.
A new report from Applied Property Research, the independent office property research consultancy, confirms what the eye can see. The sheer weight of summer London property market reports bemoaning tight supply and the lack of quality office space to let would be almost convincing, if APR were not able to identify nearly eight million sq ft of speculative office space under construction in the central area in nearly 350 schemes, says APR's second-quarter report on the London office market.
"This is the highest total since the early 1990s," the report notes.
In the second quarter of 1999, 329,000 sq m of office accommodation went under construction in central London in 40 schemes, and of that, only 58,000 sq m have been pre-let to a tenant.
Of course, anecdotal evidence suggesting a resurgence of speculative City development has been gathering for some time. Most significantly, perhaps, was Land Securities' announcement that it intends speculatively to develop an office building of 350,000 sq ft and up to 10 storeys high. The office block will have two trading floors of up to 50,000 sq ft, as well as retail and restaurant space on the ground floor.
In explaining its rationale, Land Securities says: "Our confidence in the demand for modern, high-specification office space in the city is such that we are undertaking this development speculatively."
And Land Securities is not alone. Earlier this week, Development Securities announced it had arranged to forward fund a new 106,000 sq ft City office development at Blackfriars' Court, only half of which has been pre-let.
Explaining why, after the very painful lessons of the early 1990s, there should be a resurgence of risk-taking is very difficult. But Peter Anderson, finance director at Canary Wharf - an organisation already committed to a limited but ongoing programme of speculative building - argues that a fundamental change in the way corporate occupiers behave has made speculative building worthwhile once again.
The growing pace of corporate restructuring and the merger and acquisition activity which accompanies it, means that occupiers find their accommodation requirements changing very rapidly.
"Corporate activity is happening much quicker now," Mr Anderson says. Thus, when Citicorp absorbed the investment bank, Salomon Smith Barney, it could not afford to wait three or four years for a building that could house its combined operations. The fact that Canary Wharf can deliver a building to full specification in 18 to 24 months is likely to be a strong selling point to occupiers with a requirement for very large space. Mr Anderson argues that factors such as deliverability and technological specification of buildings may become more important in the long run than absolute location.
Indeed, the APR report, which researches the requirements of about 2,000 relocating central London companies each year, concludes: "It is very apparent in 1999 that large floor-plates and building specification are more important than micro location."
Moreover, the continuing success of Canary Wharf in attracting traditionally conservative financial services groups typifies the weaker locational ties of many business sectors, APR concludes. If the resurgence of speculative development around London is a reflection of a sea-change in the way occupiers select premises, then the presence of cranes is no bad thing. However, developers have demonstrated little ability in self-discipline in the past. It is difficult to imagine that the current cycle will be any different.
