LONDON Feb 28 Hollywood is helping London
developers weather the financial crisis by turning empty offices
into film sets, providing cash and publicity for landlords
struggling to fill buildings with tenants because of the
uncertain economic outlook.
In addition to films and television shows, a growing number
of developers are also opening their doors to events like London
Fashion Week or temporary retail sites for online companies such
as Amazon, eBay and Google.
Others are planning to cash in on short-term demand from
film crews seeking rooftops with panoramic views during the
Olympic Games and celebrations marking the 60th anniversary of
Queen Elizabeth II's coronation.
"There has been a sea change in the way landlords deal with
empty space since the financial crisis," said Mark Hughes-Webb,
managing director of SPACE-2 Consulting, which finds buildings
for shoots and events. "They are more focused on cashflow as
shareholders want to know they are working their assets."
Developers have struggled to fill a series of striking new
buildings meant to attract a wave of tenants: five skyscrapers
in central London at varying stages of build have signed one
office deal between them.
The office vacancy rate in London's main financial district
was 7 percent in January, double where it stood at the end of
2007, its last low point, data from property consultancy CBRE
show. SPACE-2's turnover has almost doubled over the
SPOOKS AND SPOOFS
Two neighbouring office blocks near the Bank of England in
the main financial district have the equivalent of eleven soccer
pitches of empty space between them.
One is Cannon Place and though reportedly close to signing
its first tenants, Hughes-Webb said it was the venue for a new
BBC spy drama, the type of shoot that can raise 1,500-7,000
pounds ($2,400-$11,100) per day. SPACE-2 takes about a quarter
of any fee.
"We choose the right events to keep Cannon Place in the
public eye and associated with quality brands," said Mark
Swetman, project director for Cannon Place developer Hines,
saying good publicity was a bigger consideration than money.
The other block is the Walbrook building, which was used to
shoot the latest film in the spoof spy series Johnny English. In
the real world, it has been empty for two years and wealth
manager Schroders pulled out of a move there in December.
Film shoots raise similar amounts to TV productions and it
is not only buildings in the best locations that benefit. New
Batman film The Dark Knight Rises includes a stunt sequence shot
at an office block in the south London suburb of Croydon, with
the area's dour 1960s architecture doubling up as Gotham City.
Not all landlords are opening their doors. Western Europe's
tallest skyscraper, the 1,016-feet Shard nearing completion next
to London Bridge train station, turned down makers of the new
James Bond film Skyfall, which has been filming near the Tower
of London, even though it has not yet signed an office tenant.
"It is disruptive. We do not need those kind of gimmicks," a
spokesman for developer Sellar Property Group said.
Conferences and events can raise even more. London Fashion
Week netted landlord Land Securities more than 10,000
pounds when it set up one of the longest catwalks ever seen in
London at the One New Change retail and office scheme next to St
Paul's Cathedral this month.
One of the fastest growing sources of new revenue is
internet retailers like eBay setting up temporary stores to
build trust with shoppers wary of buying goods online. Landlords
can fill space for between one week and six months and
demand for space far outstrips supply , Hughes-Webb
Australian developer Lend Lease did 20 temporary
lettings across three British shopping centres last year to plug
gaps left by failing retailers, something that would not have
occurred to developers five years ago, said Simon Donaldson,
head of retail operations.
"Not only did it bring in several hundred thousand pounds
extra in rent, it saved more than a million pounds in empty rate
liabilities," he said.
Owners of buildings with panoramic rooftop views plan to
cash in on demand from camera crews looking for sites during
this year's Olympic Games and Diamond Jubilee events. Fees will
likely double from their norm to 300 pounds per hour,
"It should not have taken the recession for developers to
get more creative and work out there is cash to be made," he
said, citing a small patch of roof on a building north of London
Bridge that is frequently used to film crowds of commuters.
"That square metre is probably the most valuable piece of
real estate in London."