18 June 2010

The Highest Wastepaper Bin in Europe

Back in 1987, I remember the UK Director in IBM addressing our sales branch. He had been told by the US to cut costs, and why I don’t know, but what he said that day, or rather one single phrase he said that day, has strangely stuck with me.
He held up a waste paper bin, showed its base which was about 1ft square and said, ‘this bin costs me £70 a year just to sit here on the floor’. The office (it was just off Oxford Street in London) was ridiculously expensive even by London standards costing, yes - £70 a square foot in rent each year. He then said, looking me in the eye, ‘so if this bin costs me £70 a year, how much do you think your rather large office costs Tom?’
Well, I gulped and decided from that moment on that I would help IBM reduce their costs – from now on, I’d order a slightly cheaper bottle of wine at lunchtimes!
I jest. The real story is that of London office rental costs. It’s strange to think I was reading a story in a paper this week that London office rents are reaching the heady figure of ……. £70 a square foot again.
It’s a peculiar old business. In order to meet the demand, or more accurately, the likely demand of the London office market, developments have to be started and more importantly funded, maybe ten years in advance. And then when you’ve finished your beautiful new skyscraper with 1,000,000 square feet for rent, there’s a recession, which nobody saw coming, and your building lies there empty, gathering dust whilst your company goes broke.
It was the London Shard project which made me think of this again this week. It’s been years in the planning and now, its head should be poking above the high hoardings which surround the site just outside London Bridge station. It’ll be quite a few years before the building, which will be Europe’s tallest skyscraper, will be finished of course, but that doesn’t stop the London property market from playing their own version of financial snakes and ladders.
It appears that way back when the building was first mooted, TFL (Transport for London – the public body which runs London’s buses and tubes) decided that it just had to have a lot of space in what would be Europe’s finest office building and signed a lease to that effect at a healthy £38 per sq ft per year.
The Arabs (their nationality – not a derogatory term) who are building The Shard, this week decided that they’d take a chance and offered TFL tens of millions to tear up their contract for space in the building. TFL who are facing huge bills following the collapse of some of their bigger projects, nearly bit the Arabs’ hands off, which is a bit ironic given the propensity for hacking off limbs in the Middle East, but I digress. The Arabs reckon that the London office market can now sustain that good old figure of £70 a sq ft again and so they’ve bribed TFL to ‘vacate the premises ‘ whilst they tout around for new tenants. 

So - there you go. Once more, a wastepaper bin in London will cost the princely sum of £70 a year just to sit on the floor in a London office. This time though, it'll be the highest wastepaper bin in Europe!

Oh - and Nigel's been misbehaving again in Europe. Read about his latest exploits at the following URL:

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