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London 'cheesegrater' project revived

Land Securities, Britain's biggest property developer, last week said it would restart work on a 37-storey building known as the Walkie Talkie in nearby Fenchurch Street

Decisions taken by property developers to go ahead with the "Cheesegrater" and the "Walkie Talkie" towers in the City will see London's skyline transformed in the next few years. The buildings, due to open in 2014, will be among the tallest and the most striking skyscrapers in the capital since Swiss Re's Gherkin opened in 2004.

British Land, run by former Barclays banker Chris Grigg, said today that it had teamed up with Canada's Oxford Properties to build the 47-storey Leadenhall Building, nicknamed the Cheesegrater because of its wedge-shaped profile.

It is the second major project in the Square Mile to be given the go-ahead within a week, a sign that confidence is returning to the City property market. Last week rival Land Securities, Britain's biggest property developer, said it would restart work on a 37-storey building dubbed the Walkie Talkie, reflecting its shape and sloping sides, in nearby Fenchurch Street after signing a £500m deal with Canary Wharf Group. Both towers were put on hold during the credit crunch when the market ground to a halt as banks slashed jobs and cancelled office relocations.

Other leading developments include the Pinnacle, also known as the "Helter-Skelter," and Heron Tower on Bishopsgate, due to open early next year, as well as the Shard at London Bridge. Two others have recently been completed: St Botolph and the Walbrook, both by Minerva.

British Land, the UK's second-largest developer and landlord, has struck a 50-50 joint venture with Oxford Properties Group, the real estate arm of Toronto-based Ontario Municipal Employees Retirement System, one of Canada's largest pension funds, to build the 610,000 sq ft Cheesegrater for £340m. Designed by Richard Rogers' firm, it will be one of the tallest buildings in the City and will stand on stilts to open up the space below for public use. The storeys vary in size from 21,000 sq ft at the bottom to 6,000 sq ft at the top to accommodate various tenants.

Both skyscrapers are expected to be finished in the second quarter of 2014, when many leases expire in the City. Neither has secured any tenants yet although insurance group Aon is thought to be talking to both Land Securities and British Land. Its lease expires in 2014 and it is looking for about 250,000 sq ft. Both developers stress that they do not need pre-lets to push ahead with the buildings.

"We welcome the start of an additional office development, given our positive stance on quality office space," said Harm Meijer at JP Morgan.

The recession forced developers to mothball most projects, but commercial property market has recovered since last summer, with the weak pound fuelling demand from international investors and a shortage of prime office space boosting rents. Office rents in the City have rocketed by almost 25% this year, the strongest recovery in rents since records began 22 years ago, according to NB Real Estate. Average rents for prime space increased from £42.50 a sq ft in the first quarter to £53.00 a sq ft in the third.

The Walkie Talkie will have 690,000 sq ft of office space as well as 23,000 sq ft of retail space. While the two towers will need to generate £45 to £50 per sq ft in rent to break even, analysts believe they could command rents of around £60 per sq ft, delivering a healthy return to the developers.

On Thursday, the City's first major shopping centre opens in the shadow of St Paul's Cathedral. Designed by French architect Jean Nouvel, who created the Serpentine gallery pavilion this summer, One New Change was inspired by a US stealth bomber. It hopes to lure tourists and bankers with its Banana Republic and Hugo Boss concessions and Jamie Oliver and Gordon Ramsay restaurants. It will also have 330,000 sq ft of office space. © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds

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