CBRE Central London ViewPoint www.cbre.eu/research THE OLYMPIC LEGACY ONE YEAR ON By Matthew Black, Senior Director, Central London Development and Kevin McCauley, Senior Director, Central London Research SUMMARY London s hosting of the Olympic and Paralympic Games was a great success, helping showcase all that is great about London. The venues were completed on time, 11m tickets were sold, the transport system coped admirably and the UK won 65 Olympic medals 29 of them gold. The wonderful memories that started with the opening ceremony on 27 July 2012 ended over six weeks later with the closing ceremony of the Paralympic Games on 9 September 2012. The Olympic Park closed shortly after the Games ended to allow preparations for it legacy use. One of the key factors behind the decision to bid for the Olympic and Paralympics Games was the regeneration of East London and the legacy that the post-games era would produce. One year on, it is time to assess what progress has been made towards delivering this legacy and what more we should expect to come. INTRODUCTION The Games were located in East London to exploit the opportunities they presented to develop and accelerate its regeneration and deliver a legacy for one of London s most economically deprived areas. As Ken Livingstone said: I bid for the Olympics because it's the only way to get the billions of pounds out of the government to develop the east end. As part of this objective the government established its legacy promise around four pillars : sport, economic growth, regenerating East London, and people. This ViewPoint focuses on the regeneration legacy of the Games. Much has happened since that successful bid on 6 July 2005. London delivered a very successful Olympic and Paralympic Games and one year on it is time to assess how much progress has been made towards delivering the regeneration legacy for East London. It is best assessing the legacy impact over three distinct phases: the accomplishments that pre-dated London 2012; then to consider what has been done in the year since the Games started; and finally, assessing what the longer-term legacy impacts might be. PRE-LONDON 2012 ACCOMPLISHMENTS A significant amount of investment in the transport infrastructure was required to allow East London to host the Games. The Docklands Light Rail (DLR) benefited from a 2.6km extension from King George V to Woolwich Station and a second extension from Canning Town to Stratford International Station. Additionally, there have been capacity and resilience improvements on the Jubilee line and DLR, and the opening of the East London line which connects Stratford to north, west and south London without going through the centre of London. Capacity and interchange improvements to Stratford s regional and international stations were also significantly enhanced. These enhancements have improved connectivity at a location that was already extremely well connected. London 2012 produced many other less tangible impacts; most of which would not have been possible without the Games. These included land assembly and remediation, environmental and infrastructure transformation. All of which will provide the real foundations for the renewal of East London. The scale of these on-site infrastructure changes is truly remarkable: 6km of new tunnels for moving power cables underground, 20,000 tonnes of silt and gravel have been removed from the waterways, more than 30 new bridges have been built over rivers and railways, the creation of new parklands, new roads, a new utilities network (265km of ducts and 2km of sewers) and an energy centre.
Of course, the most significant visible change has been the opening of Europe s largest urban shopping centre at Westfield Stratford (1.9m sq ft of retail and leisure space). The opening of Westfield s shopping centre has created 10,000 jobs, including 2,000 previously unemployed local people. Stratford is now a major shopping centre, welcoming 47m visitors in its first year, something that would have seemed unimaginable only a few years ago. In contrast, London has fared much better. The announcement of West Ham United Football Club as the anchor tenants for the Olympic Stadium was the most high profile deal, while huge strides have been made towards securing the future of the longterm use of the other venues and facilities. The stadium will also serve as a multi-purpose arena and will host Rugby World Cup matches in 2015 and the 2017 World Athletics Championship. The beginnings of a new office location have also started with the completion of 130,000 sq ft at Westfield s Stratford Place. The building has let particularly well against the backdrop of a generally subdued leasing market in the rest of the Central London office market. The most recent and largest deal to date was to Network Rail for 42,000 sq ft in January 2013 indeed this was the sixth largest in Central London in Q1 2013. ONE YEAR ON The Olympic Park closed shortly after the Paralympics closing ceremony to allow the park and facilities to be prepared for their legacy use. London had learnt the lessons from other host cities in respect of how the venues will be used post- Olympics. For example, the Olympics were used as the catalyst for the regeneration of areas of Barcelona such as Montjuic (the Olympic Park), Poblenou (the Olympic Port), Diagonal and Vallde Hebron. However, Barcelona s Olympic Stadium still lacks an anchor tenant and some other facilities have no legacy use. The Aquatics Centre has had its wings removed as capacity is reduced from 17,500 to a more sustainable 2,500. It will be open to the general public and available for swimming events. The Copper Box, the first legacy venue to re-open in July 2013, will be modified to create a multi-purpose arena. Greenwich Leisure Limited will operate both of these facilities. The Velodrome, which will largely remain unaltered and a re-styled BMX track will be owned and managed by Lee Valley Regional Park Authority. The North Park and the Handball area will be the first area of the Olympic Park to reopen on the anniversary of the opening ceremony. The remainder of the Park, the South Plaza, is due to reopen in spring 2014. Venue and Facilities Legacy Use Venue/facility Olympic Stadium Aquatics Centre Planned legacy use Multi-purpose 60,000 capacity stadium - West Ham United Football venue for 2017 World Athletics Club, anchor tenant Championships Local and elite use Operator Opening date Autumn 2015 Greenwich Leisure Ltd Spring 2014 Handball Arena (Copper Box) Multi-purpose arena Velopark Eton Manor Media and Broadcasting Centres Athletes Village Local and elite use Local sports facility Commercial space for digital/creative sector East Village - new residential accommodation Greenwich Leisure Ltd Summer 2013 Lee Valley Regional Park Authority (owned) Lee Valley Regional Park Authority (owned) Spring 2014 Spring 2014 icity Summer 2013 Qatari Diar, Delancey and Triathlon Homes Summer 2013 Source: National Audit Office, London Legacy Development Corporation Page 2
It is currently over 40% pre-let. Confirmed tenants include BT Sport (80,000 sq ft), Infinity (260,000 sq ft), Loughborough University (70,000 sq ft), Hackney Community College (5,000 sq ft) and Tech Hub. When fully occupied, icity is expected to support 4,500 jobs on site and 2,000 jobs in the local area. Central London ViewPoint There has also been success in terms of the Olympics economic legacy. icity, a joint venture between Delancey and Infinity SDC, have taken a 200-year lease on the broadcasting and press centres on the Queen Elizabeth Olympic Park. The aim of icity is to create a world-class centre of innovation and enterprise that will support the regeneration of East London. It will include three main buildings: a 300,000 sq ft innovation centre; a 750 seat auditorium; and a 650,000 sq ft building housing educational space, broadcast studios, office space, and a data centre due to open the summer of 2013. Olympic Park: Commercial and Residential Locations Page 3
The recent announcement by joint venture partners Lend Lease and London & Continental Railways that they have sold a 275,000 sq ft hotel site at The International Quarter shows that the regeneration legacy of the Games is moving forward. The site will be developed into a 500 bed hotel and aparthotel by Starboard Atlantic Hotels, a joint venture between Starboard Hotels and Union Hanover Securities, with a scheduled opening in 2016. The conversion of the Athletes Village into 2,800 residential units, now renamed East Village, is the most significant development since the Games. A joint venture between Qatari Diar and Delancey bought 1,439 of these units in August 2011 as well as the right to develop another 2,000 units on six adjacent sites. The joint venture will start to take delivery of the East Village this summer: these units will be let rather than sold. The remaining 1,379 homes of the East Village will be offered on an affordable basis by Triathlon Homes. Aside from the Athletes Village, the Queen Elizabeth Olympic Park will be the other main location for residential accommodation. The Legacy Corporation has secured outline planning permission for up to 8,000 units in the Olympic Park. These homes will be contained within five new neighbourhoods each with their own character and community facilities phased over the next 20 years. L&Q and Taylor Wimpey were appointed last summer to build the first phase: Chobham Manor. This new neighbourhood, which will be close to the Athletes Village, will provide 850 homes a large proportion of which will be family housing. Having gained outline planning consent in September 2012, these homes will start construction early 2014 and be ready for occupation by 2015. WHAT S NEXT? It s worth remembering that we are at the beginning of a phased redevelopment entailing a 25-year programme. There are over 7,000 residential units to be delivered in the Olympic Park in the four remaining neighbourhoods without development partners. In addition, a further 2,000 units on the sites owned by Delancey and Qatari Diar will come forward in due course. Commercial activity will be centred on Stratford City with Westfield planning another 1.0m sq ft of offices. At The International Quarter, which spans two sites immediately to the north and south of Westfield Stratford, Lend Lease and London & Continental Railways plan to deliver 4m sq ft of offices, 52,000 sq ft retail and 350 new homes. LandProp, the development arm of Inter IKEA, own a site (Sugar Park) just to the south of the Olympic Park. They have outline planning consent for 1,192 residential units, around 400,000 sq ft of offices and flexible space and a 350 room hotel. The prominence that the Olympics gave London appears to be paying dividends for other parts of East London. ABP China Group has signed a development agreement with the Greater London Authority (GLA) to develop a 35-acre site at Royal Albert Dock. The GLA has also recently confirmed the appointment of The Silvertown Partnership on the 1.5bn transformation of Silvertown Quays. PROSPECTS FOR THE LEGACY IMPACT Unlike in the period leading up to the Olympics, the London and UK economies are on a much firmer footing. The recovery is still fragile and economic growth remains subdued, nevertheless the outlook is more optimistic and supportive of commercial and residential development. This is perhaps best reflected in London s residential market with demand for new housing expected to outstrip supply, house prices are forecast to continue rising. East London will benefit from these trends. Stratford has additional factors in its favour including connectivity and the amenities legacy from the Games. London is also expected to grow eastwards and the East London boroughs are projected to see the highest growth in London. This all bodes well for the residential units (both for rental and sales) coming through in East London over the next few years. The conversion of the Olympic Park to its legacy design has prevented any real progress on office/workspace schemes during the last year. In common with other large scale developments, these will require significant pre-lets before construction starts, something that has not been frequent across Central London in the last few years. An improving outlook for the economy and the office market will make this easier. Nevertheless Stratford will face competition from other locations such as an emerging King s Cross and Canary Wharf; its advantage will be an offer of high quality office accommodation in a well connected location at a low cost. So the Olympic legacy has had a good start after only 12 months but much remains to be delivered before the full regeneration of East London is realised. Page 4
CBRE GLOBAL RESEARCH AND CONSULTING This report was prepared by the CBRE UK Research and Consulting Team which forms part of CBRE Global Research and Consulting a network of preeminent researchers and consultants who collaborate to provide real estate market research, econometric forecasting and consulting solutions to real estate investors and occupiers around the globe. For more information regarding this ViewPoint, please contact: Kevin McCauley Head of Central London Research UK Research and Consulting CBRE Henrietta House Henrietta Place London W1G 0NB t: +44 20 7182 3620 e: kevin.mccauley@cbre.com Matthew Black Senior Director Central London Development CBRE St Martin s Court 10 Paternoster Row London EC4M 7HP t: +44 20 7182 3474 e: matthew.black@cbre.com Disclaimer CBRE Limited confirms that information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt their accuracy, we have not verified them and make no guarantee, warranty or representation about them. It is your responsibility to confirm independently their accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE. May Page 5