Further blow to commercial offices sector as workers on £800 million Pinnacle skyscraper told to down tools amid concerns over finance and costs, Construction News reveals.
The Pinnacle’s main contractor, Brookfield, is in the process of shutting down the City of London site on the orders of the client, Arab Investments.
The contractor, which has been attached to the ill-feted project since 2007, informed suppliers that construction work would be put on hold at the start of the year, CN understands.
Workers on site today told Construction News they had since received their orders to down tools.
Tower cranes stood motionless above the site today as the few remaining labourers prepared for the shut down.
Byrne Brothers’ concrete core, which first appeared above ground early last year, now stands abandoned at around the seventh floor.
One source close to the project told CN the delay could last as long as six months.
An Arab Investments spokesman denied the site would be shut for six months but declined to comment further.
The commercial office tower on Bishopsgate has proved difficult to finance, causing several previous delays.
Arab Investments - a consortium of Middle Eastern investors including the Saudi Economic and Development Holding Company – announced in September it had signed a deal to get the project back on track including a £500m debt facility from a group of lenders led by HSBC.
Work finally re-started on the 288 metre tower shortly afterwards but it is understood that the failure to sign a major pre-let agreement has once again halted construction.
Retailers are due to take 27,000 sq ft, Regus has agreed to take 80,000 sq ft and law firm Davis Arnold Cooper is reported to be interested in up to 100,000 sq ft.
But the distinctive spiralling design means the building is expensive to build and has unusual floor sizes, making it less attractive to potential tenants.
At 72-storeys, 62 of which are commercial office floors, the building will become the tallest of the clutch of skyscrapers in London’s financial district.
The project was originally scheduled for completion in 2013 but that date has since slipped.
Arab Investments managing director Khalid Addara said the building would be delivered by 2014 in a statement released in September but when CN checked in November, Brookfield’s website stated 2015 as the expected completion date.
It is unclear whether the latest delay will see that date slip further.
Another source close to the development said: “This has been immensely frustrating for all involved and risks adding substantially to the overall cost.”
Sign of the times
The delay will be taken as a further indication of the perilous state of the commercial office market which has been rocked by the eurozone debt crisis.
Hammerson’s £290 million Principal Place last week suffered a major setback as law firm CMS Cameron McKenna pulled out of a deal to pre-let 200,000 sq ft of offices in the building.
A Hammerson spokeswoman told CN procurement would continue but no contract would be signed until a major tenant had been found.
It is due to be built on Bishopsgate, close to the site of the Pinnacle.
Drivers Jonas Deloitte warned earlier this year that potential delays to London’s current batch of skyscraper developments – including the Pinnacle, Walkie Talkie and Cheesegrater – could create a shortage of available office space in 2014 and 2015.
It said that 75 per cent of all space under construction in the City is made up of the three towers.
But DJD’s crane survey warned the market perception was that some delivery dates would be pushed back.
Mace is expected to complete the Shard, which will be the tallest building in the EU, in June.