Sunday, 21 June 2009

For Rent: London

Yes, all of it.

Ah, those green shoots. People are seeing them everywhere they look. Optimism is on the rise and before we know it, we will all take out 95% LTV interest-only mortgages not worrying about such mundane things like repayments.

There is a saying that the difference between an optimist and a pessimist is that the latter is better informed. And in another word of wisdom, a colleague once told me, about 3 or 4 years ago, that a sure-fire indicator of the economy heading for a recession is the number of cranes that are up in the City.

Well, a few years ago that number was very large indeed and last time I checked we were still in a recession, green shoots are not.

Also, since builders have been busy a few years ago there is now a copious amount of office space in the City. Unfortunately, that space becomes available at about the same time as firms in the Financial Sector are clearing the desks in the space that they have already available.

If the demand for hiring is a good proxy for the demand for office space, I would not expect those "For Rent" signs to come down anytime soon.

So maybe if we are optimistically looking for green shots, it is best to cast a blind eye on commercial real estate.