How is 2008 looking for the office market?
I think that it might be a relatively unremarkable year. When offices markets go a bit flat they become uninteresting. More interesting would be extreme growth or a collapse. I don’t think we are going to see a collapse, it is going to slow down and not be quite as bubbly and there won’t be quite as many transactions.
What might that mean for developers?
Part of the problem I foresee is that companies have probably been casting their budgets in the last few weeks and are implementing them for 2008. Most are probably on the cautious side and the money set aside for investment in the business is more limited than it has been for a while because there isn’t necessarily the spare money around. The problem is that this creates unknowns as you don’t know exactly how things are going to play out. It is hard to make convincing business cases because there are too many variables.
What will this mean in terms of the number of office schemes starting construction?
A development is initiated as the result of a convincing business case being put together. I think that fewer developments will take place or start to take place this year than last, as a direct result of the uncertainty.
How will the office market be affected by changes in legislation this year?
There will be extensions to the requirements of the local authorities, a lot of local legislations regarding renewables. That is as powerful in London as any national imposition. It will have a material effect and spread and grow rapidly because it will be partly successful as technology catches up with the need and affordability, too. Some of the stuff that has been sought has been very expensive.