Recession

[wingco]

Just been out in London this evening. Yes, it's Tuesday, yes, it's been rainy. Nevertheless.

Restaurants near empty. Black cabs, yellow lights, everywhere, absolutely everywhere.

Recession.

[HORN]

Recession

I was out in Swansea on monday night.

The pubs were inexplicably crammed with people. One last hurrah?

[Etienne]

Recession

My friend went out in Cardiff last night and her restaurant of choice was fully booked. Keep your stinky English recession to yourself.

[San Bernardhinault]

Recession

I've not seen any sign of recession yet, even in London. I wonder if it's something that exists only amongst people who move money around and people who write about people who move money around.

To go all New Labour, the fundamentals are still pretty strong for most people. Low overall inflation, low interest rates, (relatively) low unemployment, and so on.

[JtS]

Recession

The news on the radio this morning was saying that the credit crunch may lead to 40,000 job losses in the city.

[Mumpo]

Recession

In what kind of jobs? How many people 'work in the City', anyway?

[wingco]

Recession

Chubby Cyclist, you're probably right. But there's nothing like rows of unoccupied black cabs to bring out the Private Frazier in me. I was thinking of going up to one of them and saying, "Blackheath, for a tenner. Take it or leave it." But I got the bus instead.

[Crusoe]

Recession

King Mob - initially it'll be front office (sales, traders, etc). Then it'll be the middle and back office people who support them (settlements, clearing, customer service). Then it'll be the IT, facilities and support staff, then it'll be the caterers, cleaners, gardeners, security guards, shop staff, anyone who works in businesses that rely on City money.

[JtS]

Recession

"The City" seems to cover the City of London (Fleet St over to Aldgate, from the Thames upto Old St) and Docklands.

[ursus arctos]

Recession

Some additional details on that study:

"JPMorgan said there could be as many as 40,000 job losses in the City of London with some 28,000 job losses in the financial sector – an increase on previous estimates that about 20,000 financial jobs could be lost during the economic downturn.

The forecast emerged in a note from the property team at the investment bank, which used the figure to forecast a fall of 16 per cent in [commercial] rents in the City.

The numbers suggest about 8 per cent of financial jobs will be lost in the next two years, with 5 per cent lost across all City occupiers."

[Rogin the Armchair fan]

Recession

I remember when Vauxhall were talking about closing their Luton operation a few years ago, the papers estimated that 50,000 people in Luton would lose their jobs, even though only about 20,000 jobs were directly being lost at the factory itself. The others were all the people who relied on those 20,000 being in work - from people selling them sandwiches and newspapers at lunchtime, to bus drivers taking them to the plant, to the people who delivered services to people who were in employment and could afford them - childminders, window cleaners, gardeners, travel agents, etc. It was weird to think that for every one person in full-time employment, as many as two others could have a job supplying them with services as a result, but when you think about it I guess that's the way the economy works.

[Spearmint Rhino]

Recession

Are you sure you weren't just straying into the shoot for a Carlsberg ad, Wingco?

[Tubby Isaacs]

Recession

Or one for Del Amitri.

At least the recession should stop the City taking over Spitalfields and Shoreditch, and might leave the odd Wren church with its spire visible.

[JtS]

Recession

The old jobs v old buildings debate.

"It's ok Mr Smith, you may be out of work, but people will be able to see that old building from a greater distance"

[Tubby Isaacs]

Recession

Your making me sound like Iain Sinclair. "I see something called a business park has replaced a derelict warehouse where I used to walk my dog".

Old buildings by the man usually regarded as Britain's greatest architect, and particularly adept at steeples. Why should anyone want to look at those?

[hobbes]

Recession

I wonder what they're going to do with all the shiny new office space they've whacked up on Cheapside, Gresham Street and south of London Wall?
Still, it looks nice and matches the other buildings now, so that's good.

[garcia]

Recession

i had the same thought as wingco wandering through a deserted dublin city centre a couple of weeks back. again however it was tuesday night, fridays and saturdays still seem busy enough.

i went out recently to the new FAI building which lies on the western edge of the city near blanchardstown. we drove past a massive complex of apartments that was totally see through, nobody living there at all. no doubt london will get going again soon enough, but the property- and construction-based economy here has totally imploded.

[ursus arctos]

Recession

The economics of the contemporary construction industry are strange. I don't fully understand the details, but it does very much appear that it often makes sense to go ahead with building large commercial and residential projects in urban centres even if it is quite obvious at the time ground is broken that there will be no demand whatsoever for the space once it is completed. The result (often for several years) is "see through" buildings of exactly the type garcia describes.

I've now seen that cycle repeated in Houston, San Francisco and Frankfurt, and have a feeling the same thing is about to happen here in Milan. My guess is that it has something to do with the idea that construction costs rise significantly over time and market turnarounds happen more quickly than new capacity can be built, but that it also has something to do with the securitisation of the risk of new construction. If the latter effect is really significant, then the credit crunch may change the pattern.

[garcia]

Recession

it also has something to do with the securitisation of the risk of new construction

what does this mean? [/financial illiteracy]

[ursus arctos]

Recession

GY is the expert here, but it basically means that much of the financial risk and reward has been transferred from the developer and its primary lending bank to a much broader class of investors, some of whom hold part of the mortgage loan (either directly or through a Collateralised Mortgage Obligation-type vehicle), some of whom may hold part of the company developing and/or operating the building (either directly or through a Real Estate Investment Trust-type vehicle).

My sense is that such spreading of the risk makes it less likely that any individual project is going to be abandoned.

[Moonlight Shadow]

Recession

It's getting quite interesting for those who rent like me now, a scan through the paper and it confirmed prices are going down, lots of desperate scummy landlord can keep up with the repayement of their buy-to-let money making scheme. Time to move to a better and cheaper place I think...

[caja-dglh]

Recession

They don't seem to be able to manage the see-through building thing here in Manhattan. It strikes me that some of the absurd number of constructions of condo's out in Brooklyn may grab this.

I get the feeling New York is a little spooked right now.

[Crusoe]

Recession

Some of the banks also either work on very short timeframes for acquiring new buildings (no waiting around for buildings to be, er, built), or on very long timeframes (building in a downturn in the expectation that the market will be on the up by the time the building is ready). As an example of the latter I think JP Morgan's plan for a 22-storey, 90,000 sq m office on the site of St Alphage House is still underway.

[caja-dglh]

Recession

That'll be because their trading floor in the old school was looking tight for space ten years ago, Crusoe. They need to move I would guess.