For many years now London's
transport infrastructure has been struggling - routes are slow, overcrowded and
unreliable. The key objectives of the Crossrail project are:
- Improved transport connectivity through journey time savings
- To support sustainable economic development through increased transport capacity and reduced congestion
- Environmental improvements, including reduced CO2 emissions
As we saw with the Olympics
project, the economic benefits to the surrounding areas of any major
infrastructure project can be immense and that is certainly the intention with
Crossrail.
The case for growth as a
panacea to our current financial woes has never been stronger; there is clear
evidence that the development of the Crossrail link will enable regeneration of
areas around the stations on its route as well as facilitating the capital's
future employment growth. Forecasts suggest that 35% of that growth will be in
areas situated along the Crossrail route, notably the West End, the City and
Canary Wharf.
Earlier in the summer, Sarah
Chapman, Managing Director of Chapman Consulting, attended a conference in
which a number of key speakers gave their overview of the likely impact of
Crossrail in the South-East and how towns and areas along the route might
benefit.
One of the key conclusions was
the likely development of so–called “hotspots” emerging on the western edge of
Crossrail's route. Hotspots enjoying a 25% house price rise would be centred on
Ealing Broadway, Southall, Hayes, Harlington, Farringdon, Whitechapel, Custom
House, Woolwich and Abbey Wood. These were all seen as ripe for
significant private development, offering opportunities in terms of a skilled
workforce and proximity to the Crossrail line. Overall, it is thought
that as many as 10,000 new jobs could be created along Crossrail's course.
As an interesting aside, the
importance of a third runway at Heathrow to global corporations based in the
South-East should not be underestimated either. Although Crossrail will
undoubtedly generate new business opportunities, there are real concerns that
should London's third runway be sited to the east of London then a swathe of
corporate re-locations will follow on behind, to the detriment of the M3 / M4
corridors, notwithstanding any benefits from Crossrail.
Within central London, a number
of factors are expected to come into play when assessing Crossrail's benefit.
The improved international connectivity brought about by the new Crossrail
stations and the Eurostar hub at St. Pancras should provide a boost to the
areas around Fitzrovia, Farringdon and Clerkenwell, particularly for those
occupiers whose business is reliant upon that improved connectivity. It has
also been mooted that some city based institutions, such as the banks, may take
advantage of the dramatically improved journey times to relocate some of their
back office functions to the outer fringes of London, thereby opening up
further development opportunities.
So far as existing rental
levels for office space are concerned, one can look at the precedents set by
the development of similar transport links in recent years. Data shows that the
opening of the Eurostar terminal at Waterloo in 1994 resulted in a growth rate
of 150% in prime headline rents in Southwark between 1993 and 1994. Those
buildings which are expected to see the greatest uplift are the ones within
walking distance of the Crossrail stations and within that specific sub-sector,
'rising' districts are expected to outperform the more mature markets, such as
Mayfair.
For the wider economy, over the
short-term the most immediate benefits will be brought about by the
construction project itself. It is currently thought to be Europe's largest
civil engineering programme, which at its peak will directly employ up to
14,000 people. Of course, the effect on the supply chain will have a further
multiplier effect and the project is committed to providing at least 400 new
apprenticeships.
At a macro level, the
Department for Trade has estimated that the implementation of Crossrail will
produce a significant contribution to the UK economy as a whole. The Wider
Economic Benefits (WEBS) are estimated at between £6 - £18bn in welfare terms,
including an uplift in tax receipts arising from increased earnings and profits
generated by those businesses which are positively impacted by Crossrail.
We draw your attention also to
a recent Evening Standard article on Crossrail and a report prepared by GVA
Grimley – see links below:
