MyCity: LONDON

For most of recorded history, the city has served as the beating heart of civilisation, and the engine room of human advancement. Our economies, our infrastructure, our communities and our real estate are all built on the foundation of our cities; so much so that it is difficult to conceive otherwise. However, the past couple of years has laid bare undercurrents that threaten this foundation and offer new opportunities. These could have significant implications for society and for real estate in the future. By mapping out the certainties of automation, economy, population, virtualisation, and environmental changes, we are able to analyse their impacts on our cities. This process has enabled us to develop four distinct scenarios that delve into the potential outcomes of urbanisation and de-urbanisation. MyCity considers how these global megatrends will drive change at the local level; and creates a vision for what it means for our real estate and our communities, with deep consideration for the past of these cities. MyCity unpacks Cushman & Wakefield’s vision for the future of six UK cities: LONDON, BIRMINGHAM, BRISTOL, MANCHESTER, LEEDS and EDINBURGH, and analyses how they are positioned to manage the challenges and opportunities ahead. Our local experts and research leads have teamed up to present a clear vision for each city in 2040, as well as outline series of call to actions for investors, developers, occupiers and local authorities in order to maximise the success of each city.

OUR FUTURE VISION OF LONDON

THE WEST END WILL BECOME A 21 ST CITY PLAYGROUND 01

THE ECOSYSTEM OF THE CITY WILL EXPAND 07

This will become an internationally acclaimed playground for both Londoners and tourists, with exciting vibrant uses and entertainment spilling into the public realm, overlayed with digital and augmented reality experiences.

Remote and hybrid working brings a much broader range of actors into London’s economic ecosystem. Regular commuter zones that previously stretched to Guildford, Stevenage, and Tunbridge Wells, could by 2040 include Leeds, Birmingham and Bournemouth, off the back of significant infrastructure investment.

THE CITY WILL REMAIN THE UK’S LARGEST OFFICE MARKET 02

SMALLER BUT MORE COMMON PATCHES OF GREEN AND BLUE SPACE WILL BE UNLOCKED ACROSS THE CITY 08

The quality of the office offer in the core will increase with an increased focus on wellbeing and carbon spend, and produce a tidemark with weaker stock which will struggle to remain relevant. The City’s office stock will have a greater weighting to flexible uses, incorporating both contractual, temporal and physically flexible attributes.

Central and Inner London will see a proliferation of urban and vertical farming uses, especially with regard to obsolescent and awkward space.

ON-DEMAND AND MICRO MOBILITY WILL BE KEY TO THE NEW TRANSPORT LANDSCAPE 09

CANARY WHARF WILL BECOME A CITY CENTRE IN ITS OWN RIGHT 03

New fine grain modes, particularly a new breed of electric on-demand bikes, will become a much more substantial way of navigating central London, with ULEZ potentially tightened further. Major rail hubs will bear more pressure in the mid-week peak, as London’s ecosystem widens.

As population growth continues to be absorbed at pace in East London, Canary Wharf will become a focal point for these communities. The transition already taking place from a day-time commuter destination, to a 24-hour live, work, play location will be complete.

REDEVELOPMENT WILL LEAD TO THE GROWTH IN SCALE AND IMPORTANCE OF CERTAIN TOWN CENTRES 04

LONDON’S INFRASTRUCTURE WILL BE BETTER UTILISED AND MODERNISED WITH ADDITIONAL CAPACITY 10

A number of Opportunity Areas, such as Romford, Bromley, Canada Water, Greenwich, Euston, Kings Cross and Earls Court will all be substantially complete by 2040, which will focus significant new growth opportunities on the outer London ‘town centres’ consumed over the past 300 years by London’s expansion.

This will include the better use of the Thames and even possibly canals. London’s digital infrastructure will also be upgraded, with IoT and AI being used to manage congestion issues, increase local democracy, and improve the efficiency of public service delivery.

THERE WILL BE A MORE UNIFIED APPROACH TO GOVERNANCE ACROSS THE CITY 11

THE ECONOMIC BASE WILL DIVERSIFY 05

By 2040, we envisage a more unified public sector approach in London, including more formalised partnerships between the boroughs, a strengthened Mayor’s office / GLA, and potentially the emergence of a body to manage the public estate more comprehensively.

Life sciences, artificial intelligence and high-tech manufacturing operations which will drive a significant percentage of real estate demand by 2040.

LONDON’S HOUSING STOCK WILL EXPAND GEOGRAPHICALLY AND IN QUANTUM 06

LONDON’S BUILDINGS AND LIFESTYLE WILL BE ATTUNED TO SUSTAINABILITY 12

Most of this growth will be delivered in large outer London schemes or through new towns within the wider South East such as The Green Quarter in Southall or Ebbsfleet Garden City. Spatial needs will continue to evolve, with the PBSA sector growing significantly to house the city’s future talent; new high-density housing more adequately addressing the needs of families, with green space provision, and home workers, with either dedicated or shared workspaces built into scheme design.

By 2040, we will see the widescale deployment of new construction methods and materials, such as CLT, zero carbon cement, and graphene, will create a large swathe of real estate that is net zero carbon in operation. People will move less and with more purpose. 15-minute neighbourhoods in new town centres, combined with hybrid working will ameliorate the need for unpurposed travel.

WELCOME TO LONDON 2040

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01

02

03 RECENT DEVELOPMENTS SHAPING LONDON p14

MYCITY: LONDON p06

HISTORY OF LONDON p10

04 LONDON TODAY p20

05 DIRECTION OF THE CITY TO 2040 p24

06 MEGA TRENDS SHAPING THE FUTURE OF CITIES p40

07 FUTURE OF CITIES: OUR VISION p50

08 FUTURE OF LONDON: OUR VISION p64

09 CALLS TO ACTION p74

CONTENTS

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01 MYCITY: LONDON

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A NOTE FROM 2040

“

LONDON IS A CITY ABOVE ALL OTHERS; IT IS A GLOBAL FINANCIAL TITAN WITH A WEALTH OF HISTORY REACHING BACK TWO MILLENNIA.

With the pedestrianisation of Oxford Street and other keys locations across the city now in place, this has allowed London to flourish. A proportion of buildings that were previously occupied by offices across The City and Canary Wharf have been repositioned to offer student accommodation, healthcare services and affordable places for young professional to live – no one could have envisaged what a positive impact this would have on London back in the 2020s.” Health and wellbeing continue to be paramount for people working, living and visiting London. The green spaces and parks across the capital play a key role and allow people to exercise and de-stress in a pleasant safe environment. The large scale investment that both public and private sectors have made over the past 20 years, since 2020, in improving open spaces has definitely had an impact on our wellbeing and the way London operates.

Its resilience is truly remarkable. Had you been asked 20 years ago what the next two decades would mean for London, your answer could not have contained the words “COVID”, “Brexit” or “Global Financial Crisis.” Yet London has been through all of these in that relatively short period of time, emerging, yet again, as the international powerhouse it has always been. Its scale is also immense – to put this in context, Reading is a very important UK town, and it has more or less the same population as Southwark, just one of London’s 32 boroughs. London has taken huge leaps forward with every Industrial Revolution. The First Industrial Revolution introduced steam and waterpower to produce goods mechanically. The Second Industrial Revolution saw the use of rail and telegraph to speed up communications and the movement of people and goods. The Third (Digital) Industrial Revolution took place towards the end of the 20th century, characterised by the mass rollout of computing power, data collection and globalisation that enabled London to thrive as a global centre of the service economy. The Fourth Industrial Revolution, happening now, mixes the physical, digital, and biological worlds. Advances in artificial intelligence, robotics, the Internet of Things (IoT) are just some of its key components. These changes are so deep and so fast that they will radically disrupt every aspect of life, including the life of London.

DOMINIC BOUVET REGIONAL MANAGER PARTNER LONDON & SOUTH EAST

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02 HISTORY OF LONDON

A surprising defining feature of London’s development has been its coffee houses. Introduced around 1650, these establishments were the preliminary versions of the stock exchange and insurance industry. Coffee houses such as Lloyds, Jonathan’s, and Garraway’s were the

beginning of the gigantic credit, security, and financial markets that led to London’s huge significance in worldwide trade.

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THE ARRIVAL OF THE TRAIN LED TO A RAPID SPREAD OF LONDON’S FOOTPRINT – A GOOD EXAMPLE OF THE SUDDEN GROWTH OF THE SUBURBS IS THE CONSTRUCTION IN 1863 OF CLAPHAM JUNCTION – ORIGINALLY BUILT WITH JUST ONE LINE, IT IS NOW EUROPE’S BUSIEST STATION BY NUMBER OF TRAINS THAT PASS THROUGH IT (100-180 PER HOUR). The growth of the rail network and strong population growth spurred the sudden rise in housebuilding (as well as the provision of retail and public houses that would go hand-in-hand with this) in areas such as Clapham and Battersea, expanding the capital’s commuter zone. Another example of this was the Metropolitan Line, which also had a huge impact – London’s suburbs were truly underway. In the years after World War II, London seized the opportunity to rebuild itself – much of which was entirely necessary. The area between Moorgate and Aldersgate, for example, had been completely destroyed in a single night of The Blitz, and from these ashes rose The Barbican Centre, offering world class culture, a school, a museum, and significant residential accommodation. Slums became high rise housing, and buildings such as the Royal Festival Hall (1951) appeared, which was the start of the modern-day South Bank.

There were significant changes to the city’s population, too. 1948 saw the arrival of HMT Empire Windrush from Jamaica. This accelerated London’s development toward the multiracial society that it is today – and yet another example of fresh, ambitious talent coming to see where life in London would take them, and where they could take London. Vast projects have changed the face of London in the last 30 to 40 years. King’s Cross is just one example of this, transforming a derelict area into one of its most attractive and sought-after quarters. These have been accompanied by very significant infrastructure projects – the most recent of which is the Elizabeth Line, which has bolstered connectivity with resulting benefits for areas such as Farringdon, where very high-quality office buildings are being delivered around the station as a result. London’s presence and success is by no means guaranteed. So far, this has been attributed to its ability to reinvent itself, to grow rapidly and prosperously (generally speaking) and to be open and accessible, attracting and retaining businesses and people to live, grow and help shape the city. This needs to continue to be the case for London to continue to flourish.

LONDON POPULATION 1801 - 2021

Expansion of London in population and global importance along with the introduction of the railways

Massive population, economic and geographic growth along with considerable poverty

10M

BATTERSEA POWER STATION STOPS

GENERATING ELECTRICITY

9M

8M

7M

FIRST SECTION OF LONDON UNDERGROUND OPENS

2012 OLYMPICS

WINDRUSH GENERATION ARRIVES

6M

ICONIC RED TELEPHONE BOXES INTRODUCED

GREAT EXHIBITION HELD IN THE CRYSTAL PALACE

FIRST COMMERCIAL BUILDINGS IN CANARY WHARF OPENS

5M

4M

IRISH FAMINE BRINGS IN REFUGEES

TOWER BRIDGE OPENS

Mid-century stagnation and decline following WWII & suburbanisation

Residential boom increases urban living, along with the growing cultural scene and globalisation increasing London’s draw

LONDON STOCK EXCHANGE IS FOUNDED

COUNTY OF LONDON DIVIDED INTO 28 BOROUGHS

3M

2M

SEWER NETWORK OPENS

FIRST RAILWAY IN LONDON IS BUILT

1M

1801

1851

1911

1971

2011

2021

SOURCE: GB HISTORICAL GIS / UNIVERSITY OF PORTSMOUTH, A VISION OF BRITAIN THROUGH TIME.

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03 RECENT DEVELOPMENTS SHAPING LONDON

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CANARY WHARF

The London Docklands Development Corporation was established in 1981 by the government to catalyse development and revitalise the derelict East London Docklands area. The first commercial buildings of the modern Canary Wharf, intended as a pressure valve for the City of London, opened in 1991. The Docklands Light Railway (DLR) was constructed to connect the growing Canary Wharf centre, along with the Jubilee Line extension in 1999 and more recently the Elizabeth Line. Its 97 acres contain 16 million sq ft of office and retail space. Originally used almost exclusively by financial services companies, the make-up of occupiers is now considerably more diverse and is continuing to evolve – as demonstrated by the recent announcement of the joint venture with life sciences developer Kadans to provide large scale research and development workspaces associated with this sector.

BATTERSEA POWER STATION

Battersea Power Station stopped generating electricity in 1983, and since then there have been numerous plans and proposals for it; a theme park was one of the more colourful suggestions, as was the proposal to make it the home of Chelsea FC. It was purchased by a consortium of Malaysian investors in 2012, who set about delivering one of London’s most significant regeneration projects. A key milestone for the development was when Apple committed to 500,000 sq ft of workspace in the power station itself, the expansion of the Northern Line to Battersea Power Station and the shopping centre opened in October 2022. It is projected that 25,000 people will be living and working here when the development is complete, along with a new office district with over 3 million sq ft of commercial space, creating one of London’s largest office, retail, leisure, and cultural quarters.

KING’S CROSS

Partnering with the GLA, Argent began work on transforming the previously rundown, King’s Cross area in 2007. There are now 67 acres of highly attractive mixed-use space across 50 new or restored buildings, providing 1,750 new homes, 10 new public parks and squares, 100 shops and restaurants, and workspace that is home to Meta, Universal Music, Google, Sony, and Nike, amongst many others. It has also been the catalyst for ‘The Knowledge Quarter’ which encourages knowledge sharing and collaborations between the world-leading academic, educational and creative institutions within its bounds. King’s Cross is a global triumph of large-scale urban regeneration as well as being a transport mega-hub with immediate access to local, regional, national, and international connections.

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INNER LONDON NON-DOMESTIC FLOORSPACE INDEX (2001 = 100)

130

OFFICE

120

OTHER

110

RETAIL

100

TOTAL

90

80

INDUSTRIAL

70

STRATFORD/OLYMPIC PARK

60

Deindustrialisation and subsequent decline led to Stratford being selected for the primary site of the 2012 Olympics, delivering a massive regeneration project in the area. The legacy of the Olympic Games and investment into the area include IQL, a large office and retail campus, the Westfield Stratford City shopping centre, and East Bank, a new cultural addition to the area which includes offshoots of the BBC, Sadlers Wells, the Victoria & Albert Museum, UAL and UCL. Another beacon in this location is Here East, an innovation hub that uses the legacy media and broadcast buildings and infrastructure from the games. This is now a very successful innovation campus, hosting a wide range of educational and tech occupiers. There is also a significant housing impact – 10,000 new homes have already been built, two of five new neighbourhoods are under construction, targeting 55,000 additional residents by 2031.

50

2001

2005

2010

2015

2020 2022

WHITE CITY

SOURCE: VOA

Aside from the BBC White City site built in the 1990s, much of White City was in considerable disrepair by the late 20th Century. In the years since, the area has undergone considerable regeneration, including the development of London’s largest covered shopping centre at Westfield London on the site of the 1908 Franco-British Exhibition, Stanhope & Mitsui Fudosan’s redevelopment of Television Centre, and the growth of a significant life sciences and technology hub within White City Innovation District. Connecting Hammersmith Hospital with Imperial College London’s White City campus and White City Place, the area is a growing innovation and entrepreneurial ecosystem, leading the growth of life sciences, medtech, biotech and academic research.

INNER LONDON NON-DOMESTIC FLOORSPACE, 2022

OTHER

RETAIL

INDUSTRIAL

OFFICE

SOURCE: VOA

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04 LONDON TODAY

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WHERE DOES LONDON SIT IN THE CONTEXT OF THE UK TO PLACE LONDON IN A UK CONTEXT, WE HAVE BENCHMARKED ITS PERFORMANCE USING A NUMBER OF DATA SOURCES.

THE WORKING AGE POPULATION FOR LONDON WAS 9.03 MILLION IN 2020, HAVING INCREASED BY 24% FROM 2000. WHILE THIS FIGURE HAS OUTPACED THE UK AVERAGE GROWTH OF 14%, THE OUTLOOK FOR LONDON IN THE COMING 20 YEARS TO 2040 IS SOMEWHAT WEAKER, AT 10% GROWTH ACROSS THE PERIOD, BELOW THE 12% FORECAST FOR THE UK. Average weekly earnings in the capital were perhaps unsurprisingly the highest of the 10 cities studied, supported by the strong GVA per capita of £49.5k – 63% above the UK average and accounting for 22% of the country’s GVA. This figure is also expected to grow marginally faster than the UK average, forecasted to increase by 30% by 2040. GDP per worker in London is relatively in line with Berlin and Paris, however it is substantially outweighed by New York which reports 74% more output per worker. While earnings are higher, values are also inflated with house prices in London being the least affordable of the 10 cities that were studied at 14.5 times the average wage. This is set against lower levels of housing deliveries in London, with completions in five of the past six years being below the 10-year average. Additionally, while inner London has the highest density amongst the UK cities studied at 11,437 people per km² (p/km²), this is substantially below other European centres such as Paris (20,025 p/km²) or Barcelona (15,980 p/km²). Despite the strong levels of public transport, multiple local centres and active transport infrastructure, CO2 emissions per capita are the highest of the cities within our study. The Mayor of London has consequentially introduced further tightening on the use of polluting vehicles through the expansion of the Ultra-Low Emissions Zone (ULEZ) from August 2023. Looking ahead to 2040, the top five sectors by growth are expected to include professional & scientific services, admin & support services, construction, real estate, and water supply & waste management. There is also forecasted to be a contraction in the financial & insurance sector in the capital, along with retail and manufacturing – all of which at a faster rate of decline than the UK average. City-wide support from government through policies and grants will be needed to avoid the erosion of these sectors and the employment they offer. London’s institutions continue to drive innovation and development, however high prices can restrict research endeavours, with the capital only coming fourth in terms of the number of patents filed annually across the cities within our study.

LONDON VALUES AND UK AVERAGE BY KPI

VALUE

AVERAGE EARNINGS

UK AVERAGE

TOTAL JOBS

CO2 PER CAPITA

PATENT APPLICATIONS

HOUSE PRICE

INTERNET CONNECTIVITY

HOUSING AFFORDABILITY

SOURCE: CENTRE FOR CITIES; ONS

EMPLOYMENT RATE

DAYS OF POOR AIR QUALITY

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05 DIRECTION OF THE CITY TO 2040

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IN FRAMING OUR VISION FOR LONDON IN 2040, WE HAVE CONSIDERED THE PRE-EXISTING STRATEGIES AND INVESTMENT COMMITMENTS THAT ARE ALREADY ‘BAKED IN’ TO THE CITY’S FUTURE.

INFRASTRUCTURE/ TRANSPORT

RECENTLY COMPLETED

PROPOSED

ELIZABETH LINE (CROSSRAIL)

BARKING RIVERSIDE EXTENSION

CROSSRAIL 2

WEST LONDON ORBITAL RAIL ROUTE

A broadly southwest to northeast line, proposed to connect (for example) Clapham Junction to Euston and Kings Cross St Pancras, although work was paused on this in October 2020.

The final stage opened on May 21st 2023. Despite being vastly over budget and much delayed, this line has already been transformational to London’s infrastructure.

The Overground now connects passengers from the new Barking Riverside town centre to central London in as little as 22 minutes and to Barking in 7 minutes, delivered in July 2022.

A new overland rail line running from Hounslow to West Hampstead and Brent Cross/Hendon, with a proposed route expected to be identified by the end of 2023.

NORTHERN LINE EXTENSION

BAKERLOO LINE EXTENSION

HS2

Connecting newly developed areas at Nine Elms and Battersea Power Station to the Northern Line network from Kennington, which opened in September 2021.

Pushing south from Elephant & Castle to Lewisham via Old Kent Road, consultation was progressing in 2019 although development has paused since the pandemic (due in part to the impact on Transport for London’s finances).

The new high speed rail line between London and Birmingham is currently under construction. Recent policy has changed its previously planned route. As a result there is currently uncertainty on the impact for development at Euston and Old Oak Common.

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KEY FUTURE DEVELOPMENTS

UNDER CONSTRUCTION

CANADA WATER

BRENT CROSS TOWN

OLD STREET ROUNDABOUT AND STATION

SILVERTOWN TUNNEL

In North London, Brent Cross Town is a new park town centre, set around 50 acres of green parks and playing fields, targeting net zero carbon by 2030. Related Argent, in partnership with the London Borough of Barnet, is already on-site to deliver 6,700 new homes, over 50 locations for retail, food and drink, workspace for over 25,000 people, along with community services including three redeveloped schools plus health, wellness and amenity services.

Located in Zone 2 within southeast London and part of the Docklands to the south of the River Thames, 53 acres of historic dockland is being transformed through major investment by British Land and Australian Super, supported by the London Borough of Southwark. Proposals include 3,000 new net zero homes, 2 million sq ft of workspace, and 1 million sq ft of retail, leisure, entertainment and community space; including a new leisure centre and a new 3.5-acre public park, set alongside the existing 130 acres of water and green public spaces in the area.

Under the Thames, linking Silvertown to the Greenwich Peninsula in east London, the tunnel aims to help reduce chronic congestion at the Blackwall Tunnel and allow for better public transport links, including more cross-river bus journeys. It is planned to open in 2025.

TfL are modernising the station entrances and an outdated 1960s roundabout to create a safer, more welcoming environment. Work is continuing to create a major new public space with better walking and cycling access to Old Street station. The project will also create two new passenger entrances, a green roof, and new lifts to an upgraded retail area, and is proposed to complete in early 2024.

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OLD OAK COMMON

EARLS COURT

EUSTON OVER STATION DEVELOPMENT

OLYMPIA

The 134-year old iconic London exhibition space, Olympia, is being redeveloped into a mixed use creative and cultural hub within the capital. The new scheme will deliver a music venue with a capacity of 4,400 people, a 1,575-seat performing arts theatre and a school for creative arts. In addition, the site will hold four major exhibition halls with a 26,000 capacity, two international hotels, 2.5 acres of new public realm and 550,000 sq ft of Grade A office space.

Following its closure in 2014, the 40-acre former Earls Court Exhibition Centre in West London will be the site of up to 4,500 below net-zero homes, as well as a green technology research and development hub, delivering up to 15,000 jobs across 2.5 million sq ft of workspace. Being brought forward in a joint venture by Delancey (on behalf of its client funds and pension fund manager APG) and Transport for London, The Earls Court Development Company are currently drafting the masterplan, with a vision to “bring the wonder back to Earls Court”, including 500,000 sq ft of culture, retail, dining and leisure space. Across the site, only 40% of the land is proposed to be built on, with a significant landscaping component throughout the scheme and a public park at the centre of the masterplan.

With six high-speed rail and eight conventional rail platforms, Old Oak Common in West London is expected to be the largest new station to be built in Britain’s history. The HS2 connection will deliver links across the country, while the Elizabeth Line will provide access to central London and to the world via Heathrow Airport. This considerable strength in the transport offer will drive regeneration in the local area which will ultimately deliver up to 25,500 new homes and 65,000 jobs, driven by the Old Oak and Park Royal Development Corporation. Construction is currently underway.

Euston Station and the surrounding area (60 acres overall) is undergoing a considerable redevelopment around one of the busiest transport hubs in the UK. The sustainable mix used district will be delivered in multiple phases, with Lendlease as the Master Development Partner. It is expected to complete in the 2040s.

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REGULATORY

BARKING RIVERSIDE

CROYDON

The GLA restated Croydon as a key opportunity area in the 2021 London Plan, with the potential for 14,500 new homes by 2041. While numerous residential schemes have come forward in Croydon in recent years, the major regeneration opportunity sits with Unibail-Rodamco-Westfield (URW), who bought out Hammerson from their JV in April 2023 and now sit in control of a development site of 26 acres in the centre of Croydon, encompassing the Whitgift and Centrale Shopping Centres, the former Allders, and other adjacent ownerships. It remains to be seen what URW develop at this site, but it commands the majority of a town centre crying out for investment, and represents one of the most significant mixed use growth opportunity areas in Greater London.

With over 10,000 new homes, seven new schools, community infrastructure and 21 hectares of open space and sports pitches, Barking Riverside is one of the largest developments shaping the future of London. Located to the east of the capital, the new town is connected to the centre through a new Overground rail station, along with the Thames Clipper service from Barking Pier. The scheme has over 2km of frontage along the river to the south, with a network of footpaths and cycleways throughout. L&Q and the Mayor of London have partnered to form the Barking Riverside Limited Development Company to deliver the scheme, which also includes commercial and community space. This development is part of significant development across the London Borough of Barking and Dagenham, which is a growth area expected to deliver 50,000 new homes and 25,000 new jobs over the next 20 years.

PLANNING

The Levelling Up and Regeneration Bill is currently going through Parliament and a number of concerns have already been raised that any benefit to the rest of the country could be to the disadvantage of its capital city. This includes National Development Management Policies (NDMPs), covering ‘general’ development control policies relevant to most local authorities which would not then be repeated in Local Plans. NDMPs would have the same weight as development plans but be given priority where there is conflict. This potentially reduces the scope of the London Plan and Mayor of London and may curtail the ability of the capital to set alternative or more ambitious approaches or targets. There is real concern that the levelling up agenda will treat London as ’just another city’, and not allow its very specific advantages to be exploited fully, and its challenges to be addressed. To be a successful global-scale capital city, these concerns must be addressed and provide London with the agency it requires to thrive.

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BUSINESS RATES TO EASE PRESSURE ON SMES, RETAIL AND F&B

SUSTAINABILITY

Neither the Government Energy White Paper nor the London Plan, both published in 2021, leave the reader in any doubt as to their authors’ commitment to deliver a Net Zero Carbon environment. The Mayor of London has set a target for London to be net zero carbon by 2030, and the Energy White Paper identifies 2050 as its target date for the transition to clean energy. The Energy White Paper is unequivocal in saying that the MEES requirement for non-domestic rented buildings ‘will be EPC Band B by 2030, where cost-effective’. This is a necessary ambition to tackle the climate crisis, but it does raise the question of what will happen to the many buildings in London that will not have achieved this by 2030 – some 90% of the London’s non-domestic stock. The pressure to refurbish, reposition and repurpose buildings rather than redevelop sites will become ever more key as carbon budgets get tighter, exemplified by the discussion surrounding the Marble Arch M&S redevelopment planning refusal in July 2023. While the planning inspector recommended approval, Michael Gove Secretary of State ultimately refused the permission citing a variety of concerns, which has been seen as a clear statement of intent surrounding the desire politically for buildings to consider re-use thoroughly before a redevelopment is pursued. The 2021 London Plan states that all new developments referred to the Mayor will be required to submit a circular economy statement as well as a whole life-cycle carbon assessment. Additionally, all developments in the Central Activities Zone, Inner London Opportunity Areas, Metropolitan and Major Town Centres, all areas of PTAL 5-6 and Inner London PTAL 4 must be car-free. This puts planning policy in London ahead of in terms of carbon reduction initiatives compared to many other UK locations. In addition, the expansion of the ULEZ scheme and other traffic quieting measures clearly demonstrates the direction of travel for vehicle use in the capital, but these schemes must be by a much improved and extended transport system to support all Londoners.

The government conducted a Business Rates Review in 2021, which led to various announcements from the Treasury and the forthcoming Non-Domestic Rating Bill. Many rateable values have fallen following the 2023 Revaluation which, combined with the freezing of business rates multipliers and scrapping of downwards transition, has led to significant falls of liabilities for many ratepayers. Rates relief for retail, hospitality and leisure businesses has been extended to 2023/24 and various protections introduced for small businesses who lose eligibility for either Small Business or Rural Rate Relief. Revaluations will now occur three-yearly so future rates liabilities should be more closely aligned to rental changes and economic performance. Whilst these measures will be welcome news to London’s business owners, it is crucial to London’s long-term future that Business Rates stop being the burden that they have been, particularly for struggling retailers and the thousands of SME’s that nurture the talented and ambitious people that make London what it is.

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SIGNIFICANT MILESTONES ON THE PATH TO 2040

OLYMPIA OLD STREET STATION & ROUNDABOUT KNOWLEGE QUARTER - ONGOING 2024

OLD OAK COMMON BARKING RIVERSIDE CROSSRAIL 2 BAKERLOO LINE EXTENSION WEST LONDON ORBITAL RAIL ROUTE 2030 ONWARDS

CANADA WATER PHASE 3-5 2038

SILVERTOWN TUNNEL 2025

2040

BRENT CROSS TOWN 2030

LONDON CANCER HUB

EARLS COURT EXHIBITION CENTRE

1 UNDERSHAFT, EC3 100 LEADENHALL STREET, EC3 10 BANK STREET, E14 4 CHARTER STREET, E14 55 BISHOPSGATE, EC2 MOORFIELDS EYE HOSPSITAL, EC1 1-10 BISHOPS SQ, E1 CROYDON TOWN CENTRE, TBC 2028 ONWARDS

EUSTON STATION OSD 2033

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13 11

KEY DEVELOPMENTS THAT WILL SHAPE THE CITY BY 2040

SIZE 25,500 NEW HOMES 65,000 JOBS 2030+

SIZE 5,000 HOMES DELIVERED SINCE 2019 A FURTHER 16,000 HOMES EXPECTED CAPACITY FOR 13,000 2041

SILVERTOWN TUNNEL

OLD OAK COMMON

LEE VALLEY OPPORTUNITY AREA

2025

6

SIZE 3.0 MILLION SQ FT OFFICES 42,000 HOMES 2033

EUSTON STATION OSD

SIZE 10,800 HOMES 2030+

BARKING RIVERSIDE

SIZE 3.0 MILLION SQ FT WORKSPACE +50 RETAIL UNITS 7,550 HOMES 2030

8

13

9

12

BRENT CROSS TOWN

SIZE 2 MILLION SQ FT 3,330 NEW HOMES 3.6 HECTARES PUBLIC SPACE 380,000 SQ FT SHOPS, RESTAURANTS & COMMUNITY USES 2026+

3

10

4

14

2

WOOD WHARF

SIZE MULTIPLE SCIENCE & INNOVATION DEVELOPMENTS 3.5 MILLION SQ FT OF LAB SPACE UNDER CONSTRUCTION,

5

KNOWLEDGE QUARTER

CONSENTED OR PLANNED CONSORTIUM WITH OVER 100 ORGANISATIONS & 70,000 PEOPLE ONGOING

SIZE 15,000 HOMES

GREENWICH PENINSULA

DESIGN DISTRICT 5KM LINEAR PARK 2030+

SIZE 2.5 MILLION SQ FT OFFICES 500,000 SQ FT RETAIL & LEISURE 2040

SIZE 550,000 SQ FT OFFICES

SIZE 1.6 MILLION SQ FT OFFICES 3,000 HOMES 2038

4,400-CAPACITY MUSIC VENUE 1,575-CAPACITY ARTS VENUE 26,000-CAPCITY EXHIBITION SPACE 2 HOTELS 2024

EARLS COURT

CANADA WATER

OLYMPIA

SIZE 1 MILLION SQ FT LIFE SCIENCES CAMPUS 13,000 HIGH-SKILL

SIZE TBC – LIKELY TO INCLUDE LIVING, RETAIL & LEISURE AND OFFICES ACROSS 26 ACRES TBC

1

LONDON CANCER HUB

CROYDON TOWN CENTRE

12 7

JOBS 2040

Key metrics and completion dates for schemes are estimated

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39 MYCITY / LONDON |

06 MEGA TRENDS SHAPING THE FUTURE OF CITIES

40

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MYCITY / LONDON |

OUR FUTURE OF CITIES INSIGHT HAS IDENTIFIED THE FOLLOWING MEGA TRENDS THAT WILL COMBINE TO RESHAPE CITIES IN 2040:

ECONOMY

POPULATION

URBANISATION

MOBILITY

• Sluggish growth won’t last forever, but its impact on development will carry a legacy • A pensions crisis created by post-GFC sustained low interest rates will have an enduring impact on a growing elderly population • Lagging economic growth will mean that younger generations are comparatively less well-off than their parents • Technology, particularly the growth of AI will continue to reshape our economy. • Role automation will be a feature of the next 20 years and will change workforce composition and create more attractive conditions for re-shoring • New forms of real estate will be needed to respond to new economic activities and other forms to become obsolete

• Natural population growth will slow, then potentially reverse during the course of the period to 2040. The UK remains attractive for international migrant workers, which will be the primary driver of population growth and continue to have a bearing on demographics • Gradual ageing of population and an increase in the elderly • Economic obsolescence principal will overtake population growth as the driver of development • Growth will impact density more than footprint of UK cities

• With the UK already highly urbanised, there is unlikely to be further room for significant additional urbanisation, whereas new work models and housing costs could in fact lead to deurbanisation. This remains an uncertainty – with a number of other possible scenarios • Pull factors of city centres – towards culture and employment - may weaken as distance becomes less relevant due to technological improvements • Affordability, quality of life and youth unemployment are likely to continue to be issues, with, at present, no clear direction of travel to alleviate these problems • The push-pull equation for cities varies by demographic group, which will skew cities towards younger people

• Transportation is perhaps the biggest determinant of the shape of our cities today • There is a sharp differential on public transport adoption and reliance across UK cities • Conventional infrastructure can take easily 20 years to deliver; we are well sighted on the pipeline to 2040, but not on technological innovations which may change the game • Increased capacity on existing lines will increase densification and public transport use. New last mile modes and decentralised work have the potential to disperse congestion away from city centres and towards suburban areas • Changes in ways of working and an increased environment pressure on some transport modes mean we are all likely to travel less by 2040

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AUTOMATION

VIRTUALISATION

EMERGING TECHNOLOGIES

PUBLIC HEALTH

• Waves of automation have triggered radical changes to society over the course of history • A new wave of automation, now supported by AI - will drive significant change to the nature and focus of existing work • Automation will impact primarily process driven roles, and this includes many office workers

• Digitisation has not run its course, and will continue to influence how we work, shop and live • Virtual environments will be improved by processor power, wearables - and ultimately implanted chips • People are increasingly seeking out virtual worlds for leisure and the experience is improving • Increased virtualisation may lead to growth in virtual city equivalents, including metaverse environment, for commercial and social use cases

• Significant public health improvements in the last number of decades will continue • Zoonotic threats will increase the role of healthcare and create social and physical change • Greater focus on health and wellbeing will play through to leisure pursuits and more active lifestyles • There will be a huge focus on improving air quality and environmental standards ranging from car use to increased biodiversity and biophilia • Technology will play a central role in the early prediction and treatment of disease, further extending average lifespans

• There has been rapid technological advancements driven by significant reduction in the cost of core technologies • Internet / communication-led technologies and infrastructure will enable automation and digitisation • AI will provide personalisation, experience and a refocussing of work • 3D printing and new construction materials will deliver significant improvements to speed and cost of construction

• Humans will increasingly work alongside machines in the coming decades

• A significant minority of UK residents are likely to become left behind by this change; solutions are needed

• The city of 2040 will be augmented with visual data, enhancing experience

• New buildings are needed to respond to new forms of work that will emerge

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45 MYCITY / LONDON |

THE ENVIRONMENT AND ENERGY

SOCIAL CHANGE

SOCIAL CHANGE AND INEQUALITY

GLOBALISATION AND POLITICS

• Delays to life’s milestones (e.g. having children, purchasing first home) - means people have an extra decade of early adulthood • Renting for at least a decade will be the social norm, with a difference between London and elsewhere in the UK • Cities need to provide infrastructure for new leisure trends to remain culturally relevant

• The mitigation and creation of resilience towards climate change are some of the most significant factors for cities in 2023 - this will continue to be the case to 2040 • The challenge of moving away from gas will disproportionately impact tall existing buildings • Increased use of heat pumps, solar – and potential for growing food - will mean competition for valuable roof space on tall buildings • Energy storage will become a necessity for large scale developments • Changing environmental standards will be a significant cost to landlords, developers and occupiers – including residents – of all real estate • Air quality in cities should improve as emissions are brought under control, but this is not taken for granted and give rise to an increase in local heat networks, and on-site energy generation

• The UK still suffers from an acute North South divide, and some minority groups experience generational disadvantage • Social pressure, enabled by social media, is likely to be a continuing force for change and greater equality

• China and India will continue to see sustained economic growth

• As a result of Brexit, the UK needs to secure many new trade deals and memberships to remain a valued trade partner and significant on a global stage • Political fragmentation will resume, and new or splinter political parties may form • The political divide between cities and rural populations will widen • High levels of government debt and damaged public finances will constrain future governments

• Public sector focus will drive cities to become more equitable in the future

• Cities must maintain community diversity and cohesion to thrive

• The pace of change will be hampered by systemic barriers • The real estate industry of the future must modernise to keep pace with society

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47 MYCITY / LONDON |

12 FORCES SHAPING CITIES OF THE FUTURE

The following 12 forces will to different degrees impact on the city of 2040. This table assesses the trend, and relevant factors, and then makes an assessment of the potential impact to status quo and the certainty with which we can judge the outcome. We bake in ‘high impact certainties’ of environment, automation and social change into our hypothesis, and then use the ‘critical uncertainties’ of urbanisation and virtualisation to explore scenarios.

FORCE

DIRECTION

IMPACT

CERTAIN

M

H

MULTIPLE CYCLES / LOW RATES / SKEW TO THE OLD / STRUCTURAL SHIFT

L

H

L M

ECONOMY

M

M

GROWTH SLOWING OR NEGATIVE / AGEING / INORGANIC

L

H

L

H

POPULATION

H

L

SLOWING OR NEGATIVE FOR LARGE CITIES - INCREASINGLY YOUNG

L M

M H

URBANISATION

M

M

PT GAIN SHARE / LONG LEAD FOR INFRA / FINE-GRAIN INNOV / MAAS

L

H

L

H

MOBILITY

H

H

TECHNOLOGICAL UNEMPLOYMENT / NEW ROLES / PRODUCTIVITY

L M

L M

AUTOMATION

H

L

E-COMM / WFH / LEISURE EXPERIENCES / AUGMENTED

L M

M H

VIRTUALISATION

M

L

5G / IoT / CLOUD COMPUTING / BIOMETRIC

L

H

M H

NEW TECH

M

M

COVID / NEXT COVID? / ANTIBIOTICS / LATER LIFE CARE / OBESITY

L

H

L

H

HEALTH

H

H

WARMING / FLOODING / SOCIAL RESPONSE / NEW ENERGY

L M

L M

ENVIRONMENT

H

H

YOUNGER FOR LONGER / RENTING VS BUYING / DIVERSITY

L M

L M

SOCIAL

M

M H

ACTIVISM / CORPORATE ETHICS / MINORITY REPRESENTATION / EQUITY

L

H

L

SOCIAL JUSTICE

M

M

EASTERN SHIFT / BREXIT / POPULAR POLARISATION / PROTECTIONISM

L

H

L

H

POLITICS

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49 MYCITY / LONDON |

07 FUTURE OF CITIES: OUR VISION

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MYCITY / LONDON |

The period to 2040 spans economic cycles. The recent period of volatility will have receded to history, but its legacy will remain in persisting societal change and attitudes to work and where we spend our time. A period of slow growth and austerity will also leave its mark on the physical fabric of our cities. The slow-moving nature of real estate means that changes take time to set in, while its longevity often causes it to outlast the people and circumstances under which it was built, remaining as a manifestation of the past that continues to shape the present - and real estate in this current cycle is no exception. While weaker near-term growth and a shift towards decarbonisation may impact the near-term development pipeline, it may also help to stoke a critical reframing toward retrofitting and refurbishment rather than redevelopment. This will not only deliver a more equitable use of embodied carbon in the built environment, but will also pave the way for a more adaptable and resilient city. Meanwhile, a softening of real income and automation will shift wealth towards the retired and the asset rich, exacerbating existing inequalities. This will sit against the prevailing mood for change, and likely lead to increased public interventions in our cities and in our society. Significant waves of technological adoption, particularly in the areas of automation, virtualisation and artificial intelligence will significantly change the focus and nature of working, shopping and playing. The ability to perform many of our day-to-day activities using these technologies will put pressure on the historic role, form and function of real estate. At its most extreme, this could start to change the nature of reality, blurring the lines between virtual and physical environments and triggering the need for new forms of real estate. Our cities of the future will be run more efficiently through deeper integration on urban design and internet connected devices. LOOKING THROUGH THE CHALLENGES OF OUR PRESENT TIMES, WE HOLD AN EXCITING VISION FOR OUR CITIES OF 2040; ONE WHICH WILL BE PART OF A PATH OF SIGNIFICANT CHANGE DRIVEN BY NEW TECHNOLOGIES, AND ONE WHICH WILL DELIVER A BETTER QUALITY OF LIFE TO URBANITES.

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53 MYCITY / LONDON |

INCREASE HOME WORKING

BIG INCREASE IN AR USAGE

DISPERSAL OF POPULATION CENTRES

SUPER INTENSE CITY EXPERIENCE

BIGGER DIVIDE BETWEEN CBS AND EXURBS

CBD ROLE SHIFTS TO EXPERIENCE CENTRE AND HUB

RAPID NORMALISATION OF ACTIVITY

BIGGER AND DENSER CITIES

MAIN CENTRES THRIVE RELATIVE TO SMALLER CITIES

REOCCURRENCE / NEW VIRUS

PEOPLE MOVE ‘OFF-GRID’

FOCUS ON WELLNESS AND COMMUNITY

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MYCITY / LONDON | 55

Sustainability and cost of time pressures will be matched by solutions in new work models, virtualisation, and a focus on the ability to connect with local communities. The days of long commutes, frequent international travel and fossil-fuel reliant car usage will have peaked. This could trigger significant changes to our cities. THE SHAPE OF OUR CITIES IS SIGNIFICANTLY DETERMINED BY HOW WE TRAVEL. IN GENERAL TERMS, WE FORESEE EACH OF US TRAVELLING LESS IN 2040.

Primarily the shift will be in where we choose to live. The option to work at distance from the marketplace for the first time becomes a reality, and some (those with the privilege of such choice) will make that shift. This will move higher value demand to areas of higher amenity and lower social pressure. Over time it has the potential to reweight the economic balance of our cities, rather than the high pressure currently felt by our major cities. Population growth will be delivered through increased density, repurposing of existing real estate, and the growth of smaller towns, rather than continued urban sprawl. Our city centres will play a more focused role in housing activities that require or benefit from close personal interaction. We will no longer go to a city centre office to sit at a desk in silence, or to a shopping centre to collect a pre-purchased item. These venues will become stimulating, exciting places, with a strong focus on cultural pursuits, business engagement and personal fulfilment. Those assets that cannot deliver against these new criteria will become irrelevant and subject to reinvention. The size of the typical city core may reduce as activities are reallocated, creating a tighter more clearly defined central zone. Meanwhile, amenity and neighbourhood uses will be redistributed to match where people are spending their time.

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