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Fate of City scheme hangs in the balance

Pessimism in market casts doubts over Delancey Estates' £60m office development

ECONOMIC doubts are overshadowing another major office scheme in the City of London as gloom in the commercial sector deepens.

Industry sources said Carillion was favourite to beat Mowlem to Delancey Estates' £60 million Fetter Lane scheme in London's financial district but warned the project could be shelved due to pessimism in the market.

An insider close to the scheme said: 'We have heard this is looking like Carillion's job, but there is still no commitment to the project from Delancey Estates.

'They want a contractor to give them three months' worth of free consultancy work but then they could still pull out. It could be a good one to lose.'

The scheme - which also attracted the attention of Sir Robert McAlpine, HBG, Bovis Lend Lease and Kier - was one of the few speculative developments planned for London's depressed office market.

But Delancey Estates has yet to secure a tenant for the building and it is understood the client has still to give project manager John Shreeves & Partners a final answer on the fate of the scheme.

A Delancey Estates spokesman said: 'We are not committed to going ahead with the project. We are choosing a contractor to help with our designs, to explore risk and to learn more about the firm we choose.'

The proposals, designed by WML & Woods Bagot, involve demolishing Rolls and Arnold House to build an eight-storey block comprising 34,500 sq m of office space plus shops on the lower levels.

If the scheme goes ahead, construction work will begin in October, lasting two years.

Carillion will build the shell and core with a separate fit-out package to be let next year.

Materials resembling Bath and Portland stone are planned to finish off the block to ensure it blends in with buildings in the area.

The Corporation of London has granted detailed planning permission for the project.

Cyril Sweett is quantity surveyor, while Faber Maunsell is m&e consultant.