The rise in recruitment across Britain’s financial services industries over the second quarter of 2011 (the fastest since the initial signs of crisis in September 2007) has led to predictions of increased demand for commercial property in London – positive news for the capital following two quarters of job cuts.
According to the latest Confederation of British Industry (CBI) and PricewaterhouseCoopers quarterly survey, the insurance subsector has shown a particularly strong performance, with increased business volumes across the industry as a whole stimulating a surge in recruitment. Firms in the sector have recruited 11,000 new employees since April, and a further 10,000 appointments are expected over the next three months with the commercial property market hoping to benefit accordingly. Only last month the City of London’s Planning and Transportation Committee granted permission for yet another major commercial property development, this one in Central London’s Barbican district; it includes a tower of 16 storeys and will make up the London Wall Place site, due for full occupation by 2015. Such developments can only signify confidence in the continued growth of the market and, with the financial services sector expanding at a healthy rate, no doubt representatives from this sector will call London Wall Place home when it is finally ready for occupation.
The Royal Institution of Chartered Surveyors (RICS) has recently issued differing forecasts for the commercial property market, inevitably depending on location. After noting that the situation in London is outperforming other regions of the UK, RICS economist Simon Rubinsohn has warned of little reason to expect the ripples from the capital’s recent upturn to spread to the rest of Britain. Conversely, the commercial property market in North West England is seemingly fertile for development, largely due to the new MediaCityUK facility at Salford Quays, and the BBC’s scheduled move north is adding to the region’s flourishing economy.
Although the current ‘green shoots’ are still somewhat precarious, CBI chief economic adviser Ian McCafferty has noted the ‘heartening’ change in events leading to a ‘slight widening of spreads’. Although it’s reasonable to assume that the financial services industries will wait with a decidedly cautious optimism for consecutive quarters of growth before offsetting significant funds for expansion, the commercial property market will certainly be receptive to this growth.
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