London approves plan for joint-tallest tower in Western Europe

By Tommy Reggiori Wilkes and Iain Withers

LONDON (Reuters) - The City of London financial district has approved plans for a 73-floor skyscraper that will match in height Western Europe's tallest tower a mile to the south, in a sign that city planners are still betting on the office market despite the current downturn.

The proposed 309.6-metre (1,015.75-foot) tall tower, which will be exactly the height of London's Shard south of the River Thames, was approved after a previously consented scheme was revised "to better respond to post-pandemic office needs", the City of London local authority said on Friday.

Officially called 1 Undershaft, the tower was initially granted approval at a slightly smaller height in 2016 but never started.

The proposed building, which investor Aroland has been trying to get off the ground for years, will require the demolition of an existing smaller tower and has attracted criticism from conservation groups.

Historic England said in a consultation response to City planners in February that the alterations had not altered its impact and said it would "seriously degrade" the public realm around it.

The tower, if built, would provide 154,156 square metres of office space, areas for children's education on the 72nd and 73rd floors and a publicly accessible garden.

London's office market has been hit hard by higher borrowing costs and more home working post-pandemic, although premium space has remained in demand.

Very few major London office properties have been sold this year. Investors Nuveen and Brookfield are currently trying to sell London office towers, in a major test for investor appetite.

The supply of new space to let in London has slowed since the pandemic. However, office construction in the City has recently bucked the trend, with new starts up 7% between April and September this year, compared to falls in every other central London market surveyed by Deloitte.

Critics say London's skyline has become increasingly cluttered by generic glass-and-metal towers that dwarf historic landmarks, especially in the City of London, home to St Paul's Cathedral.

"As another, much needed office development gets approved in the City of London, it speaks to the confidence that global investors have in the London real estate market and the UK economy more widely," said Shravan Joshi, chairman of the City of London Corporation's Planning and Transportation Committee.

The Shard, currently the tallest skyscraper in Western Europe, was completed in 2012.

(Reporting by Tommy Reggiori Wilkes and Iain Withers; Editing by Frances Kerry)