Architect says fewer new builds in capital going up as Meta pulls plug on office move in response to hybrid working
The impact of rising inflation and interest rates put the brakes on work in Make’s biggest market with turnover from the UK down by more than £1m as jobs were put on ice by jittery clients.
The practice behind the scheme to redevelop the former ITV studios headquarters on London’s South Bank, now the subject of a planning inquiry which communities secretary Michael Gove is due to rule on by next week, said revenue in its domestic market last year was off by 8% to fall to £13.7m.
And it warned that the amount of new build office work in London was on the wane. “A key risk in the UK is the political environment surrounding investment decisions,” it said. “Investment is down in the financial services sector in London as evidenced by the high vacancy rate in Canary Wharf and new difficulties are emerging in terms of planning permission. As a result, fewer office buildings are being constructed in London, affecting what is a core market for Make.”
It added rising inflation was increasing the costs of labour and materials which “has led to delays in construction projects, muted demand for new construction and prompted an increased focus on value engineering across current projects”.
But it said increased income from Australia and China and Hong Kong helped push group turnover up 2% to £19.2m.
However, pre-tax profit fell further from £75,000 to just £40,000 having been £467,000 in 2020. It said net cash was £7.9m, down from £8.2m.
To underline Make’s worries, it emerged yesterday that Meta has paid £149m to break its lease on a major London development near Regent’s Park as hybrid working prompts big tech groups to pull back on office space. Meta had 18 years left on the lease.
British Land, which owns the building at 1 Triton Square, said it will now have to find a new tenant for the eight-storey building. Meta never moved into 1 Triton Square but let the space in 2021 following a major refurbishment.
British Land has already put the brakes on another London office scheme at its Broadgate site – 1 Appold Street.
Three firms are in the mix for the job – Skanska, Lendlease and Multiplex – with sources saying Skanska, which is finishing off British Land’s Norton Folgate scheme at the northern end of Bishopsgate, is favourite for the job.
But a winner on the £220m scheme is not expected until next year while British Land sorts out a pre-let.
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