“London’s economy is like a galaxy, not a star,” the recently-published London Growth Plan memorably proclaims, describing a “new era” for the capital shaped by major shifts, including towards “polycentric growth”, meaning a type no longer solely focused on the centre but on city-wide commercial and industrial development, delivering the economic benefits that have so far eluded many Londoners.
But with the City of London Corporation currently flaunting its projected new Square Mile skyline, and demand for these high-spec roof gardened glass and steel megaliths seemingly insatiable, some commentators are suggesting the capital’s “polycentric dream” is already fading.
That would be a big mistake, according to a new report from the Centre for London think tank looking at the potential of west London in particular driving what Sir Sadiq Khan calls “good growth”. The monocentric model isn’t working, it says. With economic returns diminishing and productivity and growth stagnating, a “new approach is needed”.
Could we see a new “battle of the suburbs”, not over housing this time, with government action already neutralising the “not in my backyard” armies, but about economic development? And more immediately, will next week’s MIPIM event in Cannes, Europe’s biggest annual property industry gathering, play host to a London civil war as the Mayor, the boroughs and the City vie for the attention of developers and investors?
London’s Central Activities Zone (CAZ), comprised of the Square Mile and the West End plus Canary Wharf, makes a strong case. It covers just 2.2 per cent of Greater London but generates 48 per cent of its Gross Value Added (GVA) contribution to the economy. That amounts to £315 billion, 11 per cent of the UK total. The CAZ hosts 41 per cent of London’s jobs, 33 per cent of its commercial floorspace, and 65 per cent of its total office space.
The City Corporation certainly continues to bet on the high-end office market. Its MIPIM pitch showcases its record of approving some 14 high-rise office schemes over the past 10 years and highlights a need for at least 1.2 million square metres of extra office space by 2040 to maintain the Square Mile’s “global competitiveness”. Demand for prime space outpacing supply means big returns are on offer.
But that’s the old approach, according to the Centre for London report. It argues that the monocentric reliance on an internationalised central service sector is faltering and has fuelled “substantial socioeconomic and geographical inequalities” even when booming. London’s services specialisation has entailed trade-offs that have produced “diminishing economic returns”, the report says, noting that London’s overall productivity growth has fallen to just 0.1 per cent since the 2008 financial crisis, less than the UK average.
Continuing to prioritise the CAZ risks narrowing opportunities for established industries and emerging sectors outside the centre, it says. “If London is to continue to power the national economy and drive new growth, a new, more polycentric approach is needed…supporting multiple centres of economic activity rather than clustering economic activity in a single city centre.”
Outer London is ready and waiting, it says. West London alone generates £70 billion GVA, on a par with Manchester and Leeds combined. It is overtaking central London in attracting new “high growth potential” business and household incomes are growing faster too. “We must move the needle…and resist the temptation to return to the economic orthodoxy of the pre-pandemic patterns of work…where people commute from London’s outer sub-regions to work in the centre,” says Ealing Council leader Peter Mason in the report’s foreword.
The London Growth plan, produced jointly by City Hall and the boroughs, echoes the point. “London’s suburbs are not just dormitories for its city centre workers,” it says, identifying polycentric growth as one of the “big shifts” shaping the capital’s “post-Brexit, post-pandemic era”, increasing London’s total growth potential and bringing opportunities “closer to home”.
It’s already happening in White City, Battersea, Stratford and beyond, and the plan also highlights three “industrial innovation corridors” ripe for expansion, the “WestTech” corridor, the “UK innovation corridor” towards Cambridge, and the Thames Estuary. There are big commercial and industrial schemes already underway too, at Old Oak and Park Royal, the Royal Docks, Brent Cross Town, Meridian Water in Enfield and in Barking & Dagenham – a £10 billion opportunity which the Mayor and the boroughs will be pitching at MIPIM.
The City, the Mayor and the boroughs may all be banging the drum for the capital as a whole, but where there are winners there may be losers too. As Kat Hanna from property consultants Avison Young wrote last week, businesses, developers and investors are doubling down on the CAZ again, with prime rental growth in the commercial core significantly outperforming growth beyond its boundaries.
That has an impact elsewhere. Almost 38 per cent of space built between 2020 and 2024 in the City fringe, including Holborn, Docklands and the South Bank, remains vacant, Hanna says, with vacancy rates for new buildings in areas such as Stratford even higher. Proving the point, perhaps, it was reported that a £200 million office scheme in Bankside, about as central as you can get south of the river, was on hold, with the developers looking to switch to residential.
So is monocentricity back in business, leaving those forecasts of working from home taking hold and new locations for economic activity emerging looking like just a pandemic dream? A number of factors say “yes”, Hanna suggests. It’s still easier getting in and out of the centre than getting elsewhere, and persistent economic challenges are seeing cautious developers “sticking to familiar territory” where demand is well established.
Meanwhile the London Growth Plan is backing both horses: “The challenge for London is to maintain a thriving city centre and to create the infrastructure and places for growth to spread across the city.” It’s a long game, with a lot at stake, including, as Centre for London chief executive Antonia Jennings put it when launching the think tank’s report, a “better life for all Londoners” from growth beyond Zone One. The coming week’s MIPIM skirmishes along La Croisette will show which way the wind is blowing.
OnLondon.co.uk provides unique coverage of the capital’s politics, development and culture with no paywall and no ads. Support it for just £5 a month or £50 a year and get things for your money other people won’t. Details HERE. Follow Charles Wright on Bluesky. Photo from West London Alliance.