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London: A Five-Part Metropolis

By Karim Khan

London is divided into 33 districts—32 boroughs plus the central district, a one-square-mile area called the City of London. Each of the districts can be categorized into five unofficial designations: Central, North, South, East, and West London.

Central

Encompassing the city of London and its surrounding areas, Central London is home to nearly half of London’s businesses and is known for its concentration of financial and professional services firms. It also has the largest concentration of media companies in Europe, and is the focal point for London’s tourist, leisure, and entertainment industries. When international companies think London, more often than not they think central.

North

North London has a distinct feel from the rest of Greater London. Economic developers position it as a place of untapped opportunity. While busy Central London lies to the south, North London’s northern border is shared with rural Hertfordshire, and Epping Forest lies to the east. The M1 highway lies just west. At 1.1 million people, North London has one of the largest concentrations of overseas residents and commuters. Its strong cultural identity is a contributing factor to a growing creative cluster, developing a contrast with the more traditional industrial estates. North London also offers a science cluster at Innova Park.

International companies such as Merck, Sharp & Dohme, Johnson Matthey, Exel, and GE Lighting have used North London as a base in the UK; the proximity of the M1, M11, and M25 highways has helped the area become a significant manufacturing, logistics, and distribution hub.

South

Well-defined surrounding rail and road infrastructure, plus excellent links to Heathrow and Gatwick international airports, makes South London a popular area for commuters and employers. Home to three of the top four London retail centers, South London is the largest commercial center outside Central London. International companies here include Nestlé, AIG, Mondial, Bank of America, Infosys, Lever Faberge, and Pepsico. They’ve attracted to South London’s range of affordable property and one of the most cost-competitive locations for staff in London. With assets including the Wimbledon tennis championship and high-end restaurants and bars, not to mention green spaces like Richmond Park, South London doesn’t want for lack of investment opportunities.

East

Europe’s largest urban renewal program is focused on East London. Extending from the City of London eastward to the English Channel, the Thames Gateway area of East London is the fastest growing region in Europe. Financial and professional services companies have thrived in Canary Wharf, including firms like Morgan Stanley, Citigroup, Credit Suisse First Boston, and Lehman Brothers.

East London’s neighborhoods stand in stark contrast to one another. Residential and commercial centers in outlying boroughs, such as Romford and Lewisham, give way to high-profile office towers of Canary Wharf. These towers are only a short distance from the industrial and warehouse facilities of East London’s well-developed manufacturing, R&D, logistics, and distribution hub. There are still acres of land in East London available for development. Reaching UK and European destinations is easy from East London, thanks to the proximity of City Airport and London Stansted.

West

Heathrow international airport heavily influences West London. It has created unique business opportunities for international companies in manufacturing, logistics and high technology industries. Diageo, IBM, and Glaxosmithkline have all established successful operations in West London. An entire hospitality and business service sector has been built around Heathrow, including the development of business parks such as Chiswick Park, Stockley Park, Bedfont Lakes, and First Central. The development of Terminal 5, currently under construction, will see another 30 million passengers a year flowing through the region, creating even greater opportunity for international business.

West London is also known for its creative industry: 30% of all media jobs in the UK are based here, signifying a wealth of technical skills in the area.

Top Rating for Business

London held on to its position as the number one European city in which to locate a business, according to the annual location survey European Cities Monitor (ECM), conducted by global real estate firm Cushman & Wakefield. London increased its margin over closest rival Paris, and took the top ranking in 7 of the twelve areas measured by the survey: easy access to markets, qualified staff, external transport links, telecommunications, availability of office space, languages spoken, and internal transport.

ECM was compiled by interviewing senior managers and board directors in charge of location decisions from 507 of the top European companies. It looks at the main factors which companies take into account when deciding where to locate their business, and then measures the comparative performance of 33 of Europe’s leading business cities in these areas.

London also ranks as Europe’s number one destination for foreign direct investment (FDI) according to the Ernst & Young European Investment Monitor. London now attracts over 5.7% of all FDI in Europe, the highest share for any European city.

London Labor Force Facts
  • London has the largest regional workforce in Europe at over 9 million, with over one third holding a university degree
  • London attracts around 750,000 commuters from outside of the region, accounting for just under a fifth of London’s total employment of 3.5 million.
  • London is home to 95 higher education institutions and colleges. There are over 60,000 overseas students studying in London.
  • London retains over half of its college and university graduates. It also attracts one-fifth of all UK postgraduate students seeking to establish their careers or set up businesses.
Annual Rental Rates Per Square Foot and Vacancy Rates in London
Type of Office Space
Low
High
Vacancy
New Construction (AAA office)—Downtown $79.47 $162.55 15%
Class A—Downtown $114.77 $114.77 10%
Class B—Downtown $35.30 $70.60 12%
New Construction (AAA office)—Suburbs $26.44 $61.74 13%
Class A—Suburbs $38.75 $61.74 8%
Class B—Suburbs $17.57 $21.18 10%
Industrial—Bulk Warehouse $11.49 $14.94 3%
Industrial—Manufacturing $9.69 $17.57 5%
Industrial—High-tech/R&D $17.57 $25.45 5%

 

London Real Estate Development Costs
Land Type
Low
High
Office Space in
Central Business District    		 $13 per buildable
square foot    		 $20 per buildable
square foot
Office Park $935,074 per acre     $7,792,280 per acres    
Industrial Park $357,772 per acre $3,577,722 per acre

 

Source: NAI Fuller Pelser, from 2006 NAI Global Market Report
Conversion: $0.5658 per £1.00