Plans to build the tallest office tower in the capital could be abolished as London’s office market remains under threat following the UK’s decision to leave the European Union.
Developers behind the city’s tallest skyscraper received the backing of the City of London authorities to press ahead with the 22 Bishopsgate project earlier this year, but now investors in the £1bn scheme, including Singapore’s Temasek Holdings Pvt. Ltd., Canada’s Public Sector Pension Investment Board and British Columbia Investment Management Corp., will be asked this month if they want to proceed with construction.
The 22 Bishopsgate project, overseen by AXA’s real estate unit, would add in the region of 1.4 million sq ft of offices and shops, but with the City facing a slowdown following the Brexit vote, it is feared that there could soon be an oversupply of office space, with about 6.4 million sq ft of office space set to be completed in the district over the next two and a half years, according to Savills.
“Some large projects being delayed isn’t necessarily a bad thing for the market,” said Tony McCurley, a partner at GM Real Estate, which focuses on the City. “We had been quite concerned about the risk of oversupply in 2019.”
AXA Investment Managers-Real Assets, which is leading the project to build the 278-metre Bishopsgate tower, will reportedly offer investors three alternatives: They can either stick to a plan to start work on the building this year, delay the project or sell it, although the latter option is highly unlikely.
No major construction projects have started in the City since the Brexit vote in June.