Architect Rienzo Piano calls the European Union’s new tallest building a “vertical city”, but his ‘Shard’ tower, which has opened next to London Bridge, will house the equivalent of a whole vacant neighbourhood.
Developers of the elongated 87-storey glass pyramid, built atop a train station in a scruffy neighbourhood near the Thames, will have to fill 26 floors of vacant office space at a time when rents are at the flattest in at least 50 years.
The building, which was built with funding by the royal family of Qatar, rather than a publicly listed firm, is just one of several skyscrapers now sprouting across London, with nicknames that reflect the silhouettes they cast on the skyline.
With a financial crisis having blown in since architects first came up with designs for the “Walkie Talkie” and the “Cheese Grater”, lettings have been muted.
“The only reason rents haven’t started to fall is the relatively low level of available space at the moment,” said Kevin McCauley, head of central London research at CBRE, who expects rents to remain flat for the rest of the year.
Developers say a wave of lease breaks and expirations over the next several years will prompt tenants to move into well-appointed new offices.
The development cost of the Shard, as well as a neighbouring office building called The Place, and communal areas around London Bridge train station, is about $2.4bn.
The only tenant so far is the 195-room Shangri-La hotel, which will occupy floors 34 to 52 of the 87-storey tower.
If the financial climate is bothering the Qatari funders of the Shard, they are not showing it.
“Recovering our investment is a minor thing at the moment,” said Sheikh Abdullah Bin Saoud Al Thani, governor of Qatar Central Bank.
“We have confidence in the London market and a long relationship with London,” he said, emphasising that a slowdown was part of a normal economic cycle.
The developers expect the rest of the building to be fully occupied by the end of 2014, conceding it was a long-term view only made possible because of the Qatari backing.
They believe the Shard’s location will save commuters who arrive by train from walking across London Bridge in the rain. Others are unconvinced.
“A lot of traditional city tenants refuse to cross the river to even have a look,” said Simon Wainwright, managing director of property consultancy J Peiser Wainwright. “In a nutshell, it’s a bridge too far for many.”