Land Securities Group plc, Britain’s largest real estate investment trust, said the government approved its London skyscraper development

Land Securities Group plc, Britain’s largest real estate investment trust, said the government approved its London skyscraper development dubbed the ‘Walkie Talkie’ after unexpectedly calling for a public inquiry four months ago.

Secretary of State for Communities and Local Government Hazel Blears cleared the design by architect Rafael Vinoly to build a 155-m tower at 20 Fenchurch Street in the City of London financial district, Land Securities said on Tuesday in a statement.

The development, as yet without a tenant, is intended to meet demand for new or refurbished office space in the City of London as a shortage has pushed up rents by almost 16 per cent in the year ended March31, according to consultant GVA Grimley.

The building is one of a new wave of towers planned for the district since the building dubbed ‘The Gherkin’ opened in 2004, the first skyscraper built in the district for about 25 years.

‘The issue will be the increasing cost to build them and the appetite to fund them in the face of increasing future supply,’ said Mark Bourne, a partner in the City of London office at real estate consultant King Sturge LLP. ‘There is no doubt that today’s City occupier wants them.’

Other projects in the City of London include the planned 41-storey Heron Tower, owned by Strategic Real Estate Advisors and Oman’s State General Reserve Fund; Arab Investments’ Pinnacle Tower and British Land Co plc’s Broadgate Tower and Willis Building.

Ken Livingstone, London’s mayor, is encouraging the development of more skyscrapers in the city to make better use of space.

London’s tallest building is the 800-foot-tall Canary Wharf Tower, scheduled to be superseded by the first 1,000-foot tower, known as the Shard of Glass, which is due to be completed in 2011 and stand on the South Bank of the Thames by London Bridge.

Land Securities obtained permission for the development from the City of London Corporation planning body in September. Six months later, Mr Blears’ predecessor, Ruth Kelly, called a public inquiry. Mr Blears replaced Ms Kelly, who was promoted to transport minister last month in Prime Minister Gordon Brown’s new government.

‘We anticipate strong interest from occupiers and we will be preparing the site for development now that we have consent,’ said Mike Hussey, managing director of Land Securities’ £pounds;7.5 billion (S$23.1 billion) real estate assets in London.

The tower, with 600,000 square feet of space, gained its nickname from its top heavy structure aimed at capturing the higher rents which tenants are prepared to pay for upper floors.The building features a public roof garden and will be located near the cluster of existing towers in the City of London, including ‘The Gherkin’.

Land Securities shares fell 25 pence, or 1.4 percent, to 1,726 pence in London.

The stock has declined 26 per cent this year as the Bank of England has raised interest rates and the company has reported falling values for some retail warehouses.

Source: The Business Times, 12 July 2007