By ALAN FREEMAN
Globe and Mail Update
Friday, April 4, 2003
LONDON - I went to dinner with my wife last week at a restaurant in Chelsea, a large airy café that's part of the chain of fashionable eateries run by Sir Terence Conran, the well-known designer, retailer and entrepreneur.
It was Friday evening and the weather was unseasonably warm, almost summerlike. But the restaurant was half-empty. A year ago, it would have been packed.
Only a few days before, an acquaintance told me how her husband had lost his job as an investment banker in the City. He was abroad on business and was suddenly ordered home. "They simply decided to eliminate his department," she said. "It had 30 people."
On High Street, where astronomical rents have chased away local businesses that have been replaced by no fewer than four outlets of Starbucks, vacant shops are starting to emerge along with the spring daffodils. One store has been taken over by a business specializing in liquidated merchandise like last year's Christmas candles and the latest in crocheted toilet-paper covers.
These may be only three small pieces of anecdotal evidence but they point in one direction only. London's decade-old party looks as if it's wrapping up. The signs are everywhere. There have been waves of layoffs in the City among the financial types who helped fuelled London's financial boom during the 1990s. Office space, once in short supply, is suddenly a glut on the market, as banks and brokerage firms downsize and desperately try and find tenants for suddenly-empty space.
Canary Wharf, the pioneering office development in east end London, which
went bust in the last deep recession here in the early 1990s and was
resurrected a few years later with the help of its Toronto founder, Paul
Reichmann, is running into trouble once again. Big tenants are returning big
chunks of space to the landlord or trying to flog excess space to
The erotic gherkin, a skyscraper designed by Lord Foster that looks exactly as it's described, is almost completed but still is looking for its first tenants.
The Economist recently reported that 30,000 jobs have disappeared in the City in the past two years, with another 15,000 set to go this year.
There's even talk that house prices may soon start coming down after soaring by 20 per cent in the last year alone. With the end of big City bonuses, there are no longer gangs of marauding 30-year-old City types desperate to drop several hundred thousand pounds of cash on a tastefully-converted onetime linen closet in Belgravia.
Tourists, especially from the United States, are no longer thronging the Underground in search of the Tower of London or Buckingham Palace.
Usually bustling Oxford Street finds itself a lot less crowded as retail sales take a nosedive. Sales on the Street in March were reported to be off by as much as 15 per cent from a year ago.
It's true there are other factors at play. There's a war on, one of the main Underground Lines has been partially shut since an accident in January and the congestion charge has made it more expensive for cars to travel into central London.
But there's no getting away from it. London's economy is on the skids. And none too soon.
I'm no fan of unemployment or human suffering but the excesses of London's economy are in need of a good shot of old-fashioned realism. I knew things were getting crazy last year when my local news agent shut his doors for good and sold the modest building he owned to property developers.
He said that the building, since converted into two stylish townhouses, was worth far more than his actual business so he just shut down the shop and sold out. Later, the local dry cleaner closed after she realized she couldn't afford the doubling of her rent. The store is still vacant, which seems like perfect justice for the greedy landlord.
And when essential workers like teachers, nurses and police officers are fleeing a metropolis like London because they can't afford a place to live, then something is seriously wrong.
Already, some prices are responding to the new reality. The average price of hotel room has fallen below 100 pounds a night for the first time in five years but probably still appears outrageous to many visiting Canadians.
And because of the lighter traffic brought on by the congestion charge, it's costing less to get around in a black cab.
As for house prices, I'm still waiting for the big fall. But it will come, just as the rain has returned after three weeks of London sun. Some things are simply inevitable.