Think this is bad? Next year will be even worse
Don’t be fooled by the economic news, says Kieran Long, that light at the end of the tunnel is a false dawn
I have spent the past week talking to some well-informed, and less-than-optimistic industry experts. I’ve spoken to senior people from developers Land Securities, British Land and Bovis Lend Lease, and all were saying that next year is likely to be tougher than this year for the development industry. And that means it’s not going to get easier for architects any time soon.
There will be exceptions. Japanese investment bank Nomura announced last week that it will move from its home at Canary Wharf to take 48,775m² at Waterside Place in the City of London. It’s a big commercial deal by any standards but, perhaps more importantly, leaves London relatively short of large-scale space for institutional occupiers. While smaller space is available all over the country, British Land is making the argument that the City remains a vital hub of the global financial services industry, and therefore large-scale buildings will continue to be in demand there.
These exceptions, though, are tempered by the general situation. The housing market looks set for a period of stagnation. A PricewaterhouseCoopers report this week labelled recent recovery in the housing market a ‘false dawn’ and has promised that a further 10 per cent drop in house prices will be followed by years of stagnation.
This is fuelled by higher unemployment and the lack of available credit. The housing industry will have to redraw its parameters as speculative investors and buy-to-let landlords dry up.
We must take heart that, although the number of architects claiming unemployment benefit has risen, the percentage out of work is still much lower than the national average. I have heard few stories of practices imploding, and most are taking the necessary, prudent measures to stay alive.
I bumped into one small practitioner on the street this week, who told me: ‘We’re OK at the moment, but in the next month or two things are going to dry up. We’ve moved offices and we are being very careful – it’s just about staying alive for another year.’ He might need to revise that to 18 months.