David Taylor talks to Stanhope Chief Executive Officer David Camp about the state of the market – strong leasing and weak investment – current projects including the British Library, new recruit and ‘Stanhopey’ person, James Chester… and the emerging cluster(s) of tall buildings in London. 

Hello, David. How are you? 

I'm well, thank you, David. 

Good. I wanted to pick your brains, firstly about how you assess the current London market. What's your temperature gauge for that? 

Currently, it's a very mixed bag in terms of a very strong leasing market and a very weak investment market. I think at this time in a market cycle, you would normally expect there to be quite a significant amount of oversupply, but in the current market, particularly because occupiers are much more fussy as to what super prime space they will take, whilst there's about 10% vacancy, only about 10% of that 10% is the sort of space occupiers will move into. And there's something like 5 million square feet a year of lease events coming up. There's circa 5 million square feet of space required, because those occupiers will need to move out from their current non-super-prime into super prime. So, the leasing market is extraordinarily strong, and I think will stay so, because bringing on new supply obviously takes - whatever - five years, but also, at the moment, starting a new development really isn't viable. There's a supply crunch, really, I think, for the next five years, and rents are going to continue to grow. New occupiers, but also existing occupiers, expanding quite dramatically. Quant trade, as everyone's now talking about, like State Street and Jane Street, are just growing exponentially. So, there's such a strong demand, I think rents will continue to rise quite dramatically over the next five years. 

The investment market is very different, because post-Liz Truss etc, money rates are moving out. The investment market has completely closed down, whilst people are trying to figure out what’s going on; sort out their legacy stuff.  Investment into the market has been very limited now for three years - again, which means there's not much new product coming through. Core and Core Plus assets have started to… there's been a bit of a momentum building. Goodness knows what the current issues are going to impact that, but there's still very little money around for high-risk development, repositioning assets. 

The market was just starting to come back. People were starting to come into bigger lot sizes up the risk curve. But of course, with recent events, it's difficult to see what that's going to mean. I mean, it could be good if people are wanting to invest in London; safe haven and all that. But more likely, I guess, people will be sitting on their hands again. 

So: very strong leasing market, not so great investment market. 

Perhaps we could talk about the projects that you have got on the go at the moment. How are we doing on British Library and White City Place? Where are you at? 

British Library is one of our flagship schemes, because obviously it's with the British Library, which is obviously a great institution, but also bang on the whole Kings Cross area. It's a real long haul, that project, because it has to be coordinated and we've had to safeguard, which gave us little chance of it going ahead anytime soon. We had to safeguard it with a big basement vent box; redesigning for all of that has delayed us. 

We actually got selected back in 2017 and we've only just gone ‘uncon’, so we've got planning. It's a long build scheme because of the basement box, so we won't actually be delivering that until 2031. So, there's a lot of work to be done on that before it actually comes to fruition. And we're obviously needing to be flexible in design, because a lot happens over that period of time. 

Up at White City, we completed most of the development up in White City by 2022. We're doing the final residential phase now. We've got some great tenants such as Publicis, L'Oreal, etc. The office market there, post-Covid, has been very weak, but it is definitely picking up now. So, we're seeing a lot of the existing tenants wanting to expand, and new tenants starting to look, so it's starting to move forward. And as I say, we let most of the space already. There's quite an interesting mix, because originally it was media, obviously the BBC, but also ITV and the likes of Publicis and L'Oreal, as I mentioned. But since we bought the original TV Centre buildings and the White City buildings in 2012 to 2015, Imperial College is the new site for Imperial college across the road - we like to say we did it intentionally, but thankfully we were in the right place at the right time! 

We had some very over specified BBC buildings which have proven to be ideal for Life Science occupiers. We've actually got about eight Life Science occupiers there, which has been interesting, because we've learned what they really want, rather than, we all do all this endless research as to what we think they do want. But actually, having first-hand knowledge of what they require is pretty interesting. So that's those two schemes. I mean, the other big scheme that we're involved in at the moment is One Undershaft, which will be the tallest tower in the City. The peak of the pinnacle - and that's about 1.2 5 million square feet… 

...which is Eric Parry, isn't it? 

It is, yes, and it's 72 floors. We got revised planning for it at the back end of last year, and now we're in the demolition phase, and we'll have a cleared site by Q2 ‘27, so it's moving ahead. And obviously it's seriously exciting project, being the tallest tower, but also, it's an amazing design. 

What is your view of the cluster and how it's emerged? 

Well, I think it has emerged a bit piecemeal. Now, the City has got a very clear strategy, so the bathwater line where you can build up to now is much clearer. I think if you stand back, probably some of the buildings built were, now that they've got their cluster strategy, perhaps not quite what they would want today. But generally, I think it's worked well, or it has worked well, and I think it's building up to ours as the pinnacle. There are another four towers, I think, which have either got consent or will get consent. So, by then, pretty well, the cluster will be complete. The oddity, or the odd one out, is the Walkie Talkie, which stands by itself... 

...in many ways, yes! 

In many ways! I mean, obviously architecture is ‘Marmite,’ but obviously it's a very specific design. And I think now the City is trying to create a bit of a cluster around that, to 50 Fenchurch and others, to not have it standing out so proudly by itself, but it being a sort of second cluster, as it were, albeit lower buildings. 

As you travel around the world, do you compare London's tall buildings to others, say, in the US, and does it compare favourably in your view? 

I think, as you know, in the US, it's much more of a cookie-cutter approach. There's a lot of buildings of a standard, very regular format, which is not how the City works, because obviously we've got the plots we build on and not nice rectangular blocks, and obviously we've got St Paul's Views and all sorts of things. So, I think it's very different, it's cookie-cutter stuff in Manhattan to generalise, and in London, I think it's a much richer mix, which I think is good. 

So: last couple of questions, because we're just up to time. You've hired a new director of development, James Chester. Could you say a few words about his arrival and what he might bring to the firm? 

Yes. He's early in his career, but we've got a very clear succession planning strategy here, bringing young stars through the business, mentoring and helping them grow. He's got a great CV. He's had great experience at CO-RE, where he was before; competitors of ours, as it were. We go head-to-head on quite a few development management appointments. So, he was looking; he had done his time there, as it were, and was looking to move on, and he was sort of the perfect ‘Stanhopey’-type person with the right experience. He's been here now maybe three months or so, and we're already very, very glad we recruited him, because he's proving to be a great addition to the team. 

What is a 'Stanhopey person'? 

(laughs) What I like to think a Stanhopey person is, is someone who is client- and customer- friendly and looks at the relationships with clients, occupiers, etc, and absolutely avoids being adversarial. So, we have a heart. We tend to work with relatively few investor partners, but on a repeat basis. So, relationships - treating partners well - is in our DNA, and I think that's what I mean by him fitting in, really? 

Yes. And lastly, what's next for you and for the company, would you say? 

Well, as a balance to riskier development income, we've been building our asset management side, which is, is going well. So, we definitely want to continue building upon that. We are looking to acquire further sites at the moment. We've just acquired a site from Landsec on the South Bank, which is a clear site ready to go, which is great, because we can obviously deliver it back into a hot market quite quickly. We're reviewing science and tech, life science strategy, which obviously requires a lot of research, given the speed that AI is impacting on that part of the world, looking at re-examining that part of the market, and that part of our portfolio is taking quite a lot of time at the moment. 

Well, best of luck with it all. It all sounds exciting and progressive, and it sounds like you're pretty optimistic about the state of things. So, thank you very much. 

Yes, certainly the leasing market, for sure. Okay, thanks David!