London landlords squeeze cash from dead space

Published June 13, 2012

| Reuters

London landlords are renting out everything from vacant stores to empty sports fields, rooftops and even an abandoned quarry to cash in on the tight supply of space in the UK capital during the Olympic Games this summer.

Eleven million fans, sponsors and athletes are expected to arrive in Europe's second-most crowded city from July, stoking huge demand for storage, temporary shops and vantage points for TV cameras, in turn allowing landlords to cash in on otherwise dead space.

"You'll see usable space created that doesn't currently exist," said Mark Hughes-Webb, managing director of Space-2 Consultancy, a specialist real estate firm that finds buildings for events and film shoots.

"It's been a long time since the Games were in such a densely populated city," Hughes-Webb said. "People are having to be more imaginative."

London, the European Union's most densely populated city after Paris according to EU statistics, will host the games between July 27 and August 12. Homeowners have already hiked rents by up to six times in anticipation of the influx and commercial landlords are getting in on the act.

Unlike the last two Olympic cities of Beijing and Athens, where neighborhoods were demolished to create venues, or they were located in more sparsely populated outlying areas, most of the 34 London sites are at the heart of built-up areas.

The Games' epicenter at Stratford in the east of the city has benefited from a 7 billion pound ($11 billion) injection of infrastructure, sporting venues and homes, revitalizing an area better known for its polluted waterways and industrial estates.

Sites for hire include a former limestone quarry near the Bluewater shopping centre in Kent, southeast England, the owner of which is targeting contractors seeking temporary staff accommodation. Its proximity to a high-speed rail link means it is 30 minutes from the Olympic stadium in Stratford.

VACANT UNITS

Elsewhere the owners of a sports field in Chiswick, west London, are in talks with an overseas group of performers to rehearse for the handover ceremony to Rio de Janeiro, the Brazilian city that will host the Games in 2016.

Sites like these can cost between 10,000 to 20,000 pounds a week, Hughes-Webb said.

Also in demand are empty shops, particularly those close to busy retail areas like Oxford Street and Covent Garden, which are being snapped up by the likes of high-end U.S. clothing brand Opening Ceremony to house temporary, pop-up stores.

"Enquiries from landlords looking to lease out their vacant units during the Olympics have risen by 50 percent," said Rosie Cann, director at consultancy Pop-up Space.

Rents can be between a few hundred pounds to 20,000 pounds depending on the location and size. Stores generally remain open for between a day and two weeks, agents said.

Vacant shops around train and subway stations or Olympic venues are being rented by smaller sporting and drinks brands in need of makeshift space to store merchandise, Hughes-Webb said.

Not all attempts to find space are successful. Nike Inc's plan to build a temporary two-storey building to host exercise classes in Regents Park was blocked by Westminster council on the grounds it would ruin the park's appearance.

Equally those with empty space near venues may not see a big pay day. The London Olympic organizing committee (LOCOG) bans non-sponsors from advertising within 300 meters of venues, keeping demand in check, property experts say.

Official sponsors Cadbury, BMW and British Airways are among those companies expected to seek temporary space near Olympic venues, which include a man-made beach on the Greenwich peninsula on the Thames built specially for the Games.

PANORAMIC VIEWS

Australian developer Lend Lease owns large chunks of land around the O2 arena, also on the Greenwich peninsula and the venue of the gymnastics and basketball competitions. It will lease out land earmarked for redevelopment to Olympic sponsors to make a short-term return and in an attempt to lure permanent office tenants to the area.

"We are most definitely making money from this," Simon Donaldson, Lend Lease's head of retail operations said, declining to say how much but adding it would be substantially more without the LOCOG rules.

Elsewhere demand from film crews keen to capture panoramic views of the London skyline has pushed up prices for rooftop space. Fees are likely to double from their norm outside of the Games to 300 pounds per hour over the period, Hughes-Webb said.

Developers of the 95-storey Shard skyscraper next to London Bridge train station, about six kilometers from the Olympic park, have been approached by a string of broadcasters about filming from western Europe's tallest tower, a spokesman told Reuters, declining to give further details.

Cash-strapped local councils are also getting in on the act. Newham, home to the Olympic stadium, has rented out the upper floors of two largely empty apartment blocks next to the Olympic Park to broadcasters BBC and Al Jazeera, while Redbridge council in northeast London is leasing out a forest to a temporary hotel company to house 4,200 Olympic security staff for an undisclosed sum.

Yet many landlords are missing out as they are unaware of the strength of demand for storage space, or the value of being close to the Olympic park, Hughes-Webb said.

"People are fixated on what the space is, not what it could be. They're looking at it and saying 'it's just an empty field'," Hughes-Webb added. "Well, it's not to us." ($1 = 0.6469 British pounds)

(Editing by Tom Bill and David Holmes)

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