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GLA consultation marks latest real estate Covid-19 impact

26 June 2020

Further impact on the real estate sector caused by the Covid-19 lockdown can be seen from the news that the Greater London Authority (GLA) is aiming to leave the City Hall building in central London.

By Garry Knight - Flickr, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=31159105

It intends to move to The Crystal building, close to the ExCeL exhibition centre in East London, which will save £55m over five years, according to the GLA statement.

The move comes as the GLA faces "unprecedented financial emergency" due to the "Covid-19 crisis", said the statement.

Relocating to East London would also assist in the ongoing regeneration of the Royal Docks area, with the savings also used to assist the capital's recovery from the UK lockdown.

London mayor Sadiq Khan has additionally stated that he will take a 10% pay cut, to be reviewed after six months, to provide savings and as a mark of solidarity with all those affected by the pandemic.

The virus is predicted to see the GLA suffer a budget shortfall of £493m over the next two years due to reduced levels of business rates and council tax income.

Similar difficulties are being faced by the majority of sectors, including real estate, with the GLA move an example of actions being considered and taken by a growing number of organisations.

Although the City Hall building was leased for 25 years in 2001, it includes a clause for a break in the contract next year.

The GLA is therefore seeking to activate the clause to be released from its contract with its Kuwaiti-owned St Martin's landlord, due to rise to a total of £12.6m a year in 2021.

The Crystal Building is owned by the GLA and has been promoted as an exemplar of sustainable building design since it opened in 2012.


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