Paul McNeive: Why office tenants aren’t seeing big property price drops

The late British property developer Harry Hyams. Photo: Smith/Express/Hulton Archive/Getty Images

Paul McNeive

In 1966, the London property developer Harry Hyams completed construction of the 34-storey office tower, Centre Point, on Oxford Street, providing 29,000 sqm of space. Cleverly, Mr Hyams had leased the site at a low rent, in return for “planning gains” in the area. Despite strong market conditions, the building remained empty until 1975.

There were suggestions the developer was benefiting by keeping the building vacant, as the capital value based on the theoretical market rent was rising faster than if he agreed a letting. He successfully sued some making that case and maintained that he could not find one occupier to lease the entire building, rather than sub-dividing it. The capital value would be higher with one tenant, rather than several. Centre Point has recently been converted into apartments.