High-profile office building schemes could be the next victims of the banking crisis which has threatened Northern Rock.

Construction experts are warning that the ongoing credit crunch in the world’s financial markets could lead to the shelving of commercial building schemes.

The private housing market is also expected to suffer a dip in output as mortgage costs increase following a rise in the rate at which banks lend each other money.

But government spending levels are expected to be unaffected by the crisis when chancellor Alistair Darling announces public investment plans in the Comprehensive Spending Review.

Construction Products Association economics director Allan Wilen said: ‘The central London offices market is vulnerable to the credit squeeze and it acts as a bellwether for the whole commercial market.

‘There were already signs that it had plateaued but there are a number of high-profile schemes still on the drawing board.

‘A lot of accommodation is aimed at the financial sector but there could be a rapid retrenchment if the turmoil persists. Financial firms move quickly to cut staff and raising funds for projects will be even harder if there are doubts over tenants.’

Britain’s proposed tallest building, the £400m Shard of Glass in London Bridge, has already stalled because of funding problems. Co-developer CLS confirmed that funding for the scheme had ‘been affected by the recent adverse credit markets’.

Source

Construction Manager