London’s Shard, Europe’s first "vertical city" and the tallest building on the continent "is complete," said Eleanor Chambre of Edelman public relations firm, which represents the property, in a recent phone interview.
What she meant was that finally, after five years, all the office space in the Renzo Piano-designed skyscraper has been filled. And given that the whole multi-use building—retail, commercial, office and residential space—comprises 27 acres of floor space, occupancy is an important milestone. But it does bring up a curious oddity about the Shard, namely why its 10 exclusive luxury apartments, which make up the 53rd to the 65th floors of the 72-story building, have remained vacant. When asked about the empty flats, Ms. Edelman refused to comment.
Original brochures for the apartments, which reports say are no longer available, described the residences as spectacular for amenities and views: "On a clear day residents should be able to see the sea and the grandstands at Ascot from their new perch in the centre of the capital."
Residents were also going to be able to get to their homes by special elevator and could call the Peninsula Hotel, also located in the building, for hotel-type services.
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Even a prior Shard spokesman, Baron Phillips, was confident that the 10 apartments, which were supposed to cost as much as $65 million each, would be filled easily and quickly, saying that doing so would require no more than "20 phone calls." (These apartments were never publicly listed.) And indeed, filling the retail, office and commercial space required changing perceptions of the area of London Bridge where the building is located—on the south side of the Thames—so the fact that the building is full except for the apartments is quite an accomplishment.
Yet the question of why the apartments are empty remains. There are various theories that have been put forth, but none are conclusive.
When he inquired about the issue in 2016, Joshi Herrmann, a reporter for The Tab, was told the apartments were vacant because they weren’t on the market. "The apartments are not for sale or rent," was the answer he received to his inquiry.
This is a distinct possibility, since the building is owned by the State of Qatar and the original developer, Sellar Property Group.
And these would not be the only properties in London—or any high-end market—where foreign investors hold assets waiting for the market to turn. (For comment, the developer directed us to its PR firm, Edelman, which declined to answer questions about the empty flats.) One Hyde Park and the Tower building are two other, current examples.
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Alex Reitman, a London city planner, speculated in an interview that the developers may, indeed, be waiting for a global market change. "At the luxury end of the market," she explained, "you're usually looking at somewhere for people to park their money but not actually occupy. And in fact, the government has been trying to dissuade that with higher rates of tax for non-occupiers, although at that end of the market if you can afford a $65 million flat you don't really think about the tax, do you?" she said. (Note: The apartments at the Shard were completed prior to that new tax and so it might not apply to buyers.)
But over the summer there was a burst of published stories about the vacancies, with the general tenor of the stories suggesting that the neighborhood was the problem. "Rich people don't want to shell out zillions living south of the river; it's a shock enough living anywhere south of the [Hyde] Park," Henry Pryor, a luxury property buying agent, told the Daily Mail in July. "Nobody knows anyone who lives south of the river."
Ms. Reitman agreed that in the past, the neighborhood was a consideration, and marketing and timing of the project was an issue. "I'd understood they were struggling to [rent] the commercial/office space... [which might] have something to do with the fact that it wasn't as established a location for prime office at the time."
The neighborhood is no longer such an unknown, however. "From my perspective," Ms. Reitman said, "the location is pretty excellent and has lots going for it in terms of marketing potential, especially compared to the other options [currently] on the market or in the pipeline at that price point." Of course, as she explained further, you’d have to be in the market for Singapore-style skyscraper living, rather than a quintessentially British-style mansion in Hampstead or Chelsea.
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The location of the Shard has become a liability for a different reason altogether. Instead of it being an unknown quantity, the area is actually now too famous—or rather, infamous.
In June there was a terror attack on the bridge, and the underground station under the Shard, London Bridge Station, handles 54 million passengers per year. Would high-net-worth individuals who are likely already concerned about personal security, really want to live 40 stories above the fourth busiest station in London? There are just "too many reasons to make it a target," explained Ms. Reitman.
Finally, there has been increased international conflict with Qatar—owner of the building—which most recently meant that buying those apartments would be an act of political defiance. When Saudi Arabia, Egypt, Bahrain and the United Arab Emirates cut ties with Qatar, it affected tourism to London since so many properties, including Harrods department store and the Shard, are owned by the Gulf state, Ms. Reitman said. If you can’t market the apartments to rich Saudis, "there goes a big chunk of the potential market," she said.
And now that the rest of the building is filled, there may not be significant pressure to sell the apartments at all since there’s already steady rental revenue coming in, something deemed a success by the developer.
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In announcing that that the building’s office spaces were fully occupied, James Sellar, who now leads the family’s development company Sellar Property Group after the recent death of his father, Shard developer Irvine Sellar, said: "Together with the State of Qatar we have achieved what we set out to deliver: a vibrant and dynamic building that has been both a catalyst and a magnet for further investment in this part of Southwark."