With six major projects on the go already, the developer now boasts the largest development pipeline in its history.
Announcing strong annual growth today, GPE said its substantial pipeline of opportunities included an additional 18 uncommitted projects, including six schemes totalling 548,600 sq ft with potential starts in the next 24 months.
Spending will rise from £325m on the half-dozen projects already committed to or in construction to £533m if the next six go ahead.
Toby Courtauld, chief executive, said: “Our 1.2m sq ft committed and near-term development programme is the largest we have ever undertaken and accounts for around 25% of all core West End speculative deliveries over the next four years.
“It contains some exceptional schemes, including a major contribution towards the regeneration of the east end of Oxford Street.
“In addition, our long, flexible pipeline of future projects contains many enticing prospects, often near to Crossrail stations, stretching well into the next decade.”
Six schemes in the near-term pipeline
148 Old Street, EC1 – obtained planning permission for a major refurbishment of the existing 97,800 sq ft building to create around 151,700 sq ft of high quality office space. GPE will have vacant possession this month and is targeting completion of the scheme by early 2017.
Hanover Square, W1 – obtained a revised resolution to grant planning for a mixed-use development scheme which will now deliver 223,600 sq ft of space and enhanced urban realm. The development scheme is owned in our 50:50 joint venture with the Hong Kong Monetary Authority with a potential start upon delivery of the station structure by Crossrail.
Tasman House, 59/63 Wells Street, W1 – submitted a planning application to replace a tired 1950’s building with 36,500 sq ft of new office and retail space.
Oxford House, 76 Oxford Street, W1 – continues to work up plans ahead of a planning application submission for a 90,500 sq ft major refurbishment of the mixed-use property incorporating a significant increase in the retail space. The building sits directly to the south of Rathbone Square, W1 and is opposite 73/89 Oxford Street, W1.
The Group’s near-term programme also includes proposed refurbishments of Mortimer House, W1 (23,100 sq ft) and 84/86 Great Portland Street, W1 (23,200 sq ft).
GPE said it expected to see a pick-up in the speculative development pipeline as developers respond to stronger occupier demand levels and the prospect of rental growth.
But it predicted many of these West End schemes would face significant barriers with the lead time between development starts and completions expected to take several years.
“These barriers increasingly include a shortage of contractor capacity which is both reducing market access to new entrants or those developers without meaningful pipelines of work and supporting construction cost inflation.
“While construction costs are rising from a relatively low base, the major cost consultants are forecasting annual cost inflation of 4-7% over the coming years for commercial schemes,” said Courtald.
“Across our business, we expect to be able to largely mitigate these cost increases and capacity constraints through rental growth, our deep relationships with contractors, effective supply chain management and our pipeline of opportunities.”