London: Land of the Rising Sun (Part 1)

It may not seem it to those of us waiting anxiously for the refurbishment of The Talbot or bemoaning the state of Brockley Road, but London's future lies in the East.

Caitlin Moran puts it neatly in today's Times, so we don't have to:

"The events of Man are rendered neither as thunderclaps nor inviolable calendar entries. Instead they are more like a mist from which you can hear the odd voice saying: “Oh wow - the Industrial Revolution! How long has that been going on? I always miss the start of these things.”

In London's case, an eastward march began properly back sometime around 2000, when new commcercial lettings at Canary Wharf spiked. At the time, everyone was too worried about the Dome's shoddy contents and the spiralling cost of the the Jubilee line to notice.

Global financial meldown notwithstanding, Canary Wharf's future is bright. Its role as the centre of London's banking sector was assured earlier this year when JP Morgan gave up on trying to find a home in the City and plumped for Riverside South in Canary Wharf. This move not only triggers the construction of the UK's largest new office development, it has also hastened the arrival of a cluster of other major new projects, from another giant office complex at Heron Quays West to mixed-use schemes such as City Pride and the Great Eastern Enterprise site. Most excitingly, a masterplan for Wood Wharf will produce a proper waterfront development over the next ten years. The Wharf has brought a critical mass of employment and economic vibrancy to East London, forcing millions of Londoners to re-examine their maps. This is slowly bringing with it a cultural trickle down.

The success of Canary Wharf is dragging infrastructure priorities East too. The expansion of the DLR and capacity on the Jubilee Line would not have happened without it. It's also arguable that Crossrail would not have been approved without the need to keep pace with an expanding Canary Wharf.

Peversely, the rise of Canary Wharf also heralds the rebirth of the City. Belatedly, the Corporation of London has realised that it cannot compete with the huge floorplates on offer in Docklands and prized by big banks. Instead, their focus is now on a more winnable battle with the West End, which has poached many of the Private Equity houses and Hedge Funds, attracted by the high quality of the environment on offer in places like Mayfair. Rather than trying to squeeze unsuitably large buildings on to a medieval street pattern, the City of London is trying to create new public spaces, roof gardens and shopping streets. This means that the East London Line will alight near places like a rejuvenated Cheapside, which is being returned to its roots as London's first high street.

None of this is to say that the west won't still dominate London life, but that the balance of London life is slowly and inexorably shifting eastwards, with similarly transformative projects underway at Greenwich Peninsula, the Olympic Park and Stratford City.

So what is the point of all this, other than to say that those in Brockley with long enough attention and life spans will have their patience rewarded with a few more places to visit on the East London Line? We'll come to that in part two.


max said...

I am I the only one that hears the orchestra of the Titanic playing?

Brockley Nick said...

On the contrary, I think there are plenty of people in the blogosphere forecasting THE END OF THE WORLD as we speak.

If you forecast economic gloom long enough, you will always be right in the end and you will always be wrong.

betamatt said...

Very interesting, thanks Nick.
Talking of things shifting eastwards, I think that now Shoreditch has taken over from Soho as the media/arts center of London it will have a huge impact on SE London once the East London line is established.
All those Nathan Barleys are going to want to live somewhere nice and green and handy for work, especially once they start to have kids!

Brockley Jon said...

Indeed, it's already started. I work with in Shoredtich with an office of Nathan Barleys. The single ones all live in Hackney/Dalston, so that they can concentrate on partying nearby. The ones with families near enough all live in the south east. Tulse Hill seems like a popular choice, and isn't a million miles away from Brockley, in distance or character.

max said...

What's the point of forecasting economic gloom, it's here, what's hard to forecast is when it's going to stop, when will the recovery start and how that will happen.

You mention JP Morgan plans for a new building in Canary Wharf, well, they're lucky if they survive altogether, I'm not sure that they can afford a new building right now, you shouldn't be too surprised if the plan doesn't actually happen.
It's true that the area around Canary Wharf has changed enormously but now this kind of development halts.
The old system of big regeneration schemes funded by buy to let or offices to accomodate the expansion of the financial sector is not working anymore.
Banks don't lend money to loss making enterprises and without banks you don't build anything. It is true that banks like JP Morgan are perfectly capable of getting themselves a new office block and sack scores of employees at the same time but they may not have the funds altogether right now.
All those developments that you mention are at risk, you must see this, don't you?

Brockley Nick said...

Max, of course everything is "at risk" in a downturn when we don't know how long or deep it will be, but the property cycle operates in the medium to long term. JPM committed to the Wharf during the credit crunch and their decision to move was based on their desire to rationalise and consolidate their office portfolio - that need becomes even more pressing as a result of all of the other banks they have bought in the crunch.

Maybe JPM will go bust. Who knows? I don't and you don't. But in five years time, when many of these buildings are completed, I expect London's financial services sector will still be very large and I expect that Canary Wharf's attractions to that sector will remain strong. Not only that, but residential developments have continued to perform very strongly as more people see its attractions as a place to live.

Commercial property markets are cyclical, we have been in a trough for about a year now, but a slew of new proposals have been released lately, which suggests confidence is still strong.

The Cat Man said...

I'd go with that.

The challenge facing us in the near future is what will happen in the short term 2-5 yrs horizon.

I believe there is a disparable between the financial and real markets. Financial markets have plummeted, but the real markets has shown mixed signals and appear far from collapse.

I refer more to the supply side. How many high street chains have you heard of going bust for instance? Even property developers are far from going bust in the UK. Uemployment is broadly low-ish but getting marginally worse, consumer spending is patchy - sometimes good, sometimes bad.

We should expect some sort of semi-major adjustment to the real markets, as banks will not lend to companies wishing to expand just as they will not to households. The cause is the same - too high inter-bank lending rate however there is a lag and this takes time to filter through. But this is the missing bit of puzzle to date - the lack of effect on companies trading in physical goods and non-financial services.

Expect a significant slowdown in places like China/India . Then we know we have turned the tide.

Anonymous said...

Oil shortages will make all this academic in just a few years' time.

Anonymous said...

Yes and we will all be scratching around in the dirt. That's if we survive the revenge of the millennium bug.

Brockley Nick said...

From the Times today - Canary Wharf confirms it's pushing on with its expansion and further encouragement for the Wood Wharf expansion...

Anonymous said...

Of all banks likely to go bust, JP Morgan is probably relatively safe as it has been owned by Chase Manhattan since 2001 so is backed by a huge balance sheet (American citzens savings), although that didn't save Wachovia I suppose...

Brockley Nick said...

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