Monday, 26 September 2011

For Sale: Landmark City of London Tower - Recently Reduced. BlackRock and Hermes put Tower 42 Estate back on Market

The Tower 42 Estate, which includes the landmark City of London tower of the same name, has been offered for sale for the second time in as many years by its joint-owners, The BlackRock UK Property Fund (BUKPF) and Hermes Real Estate (HRE) who are confident that they can achieve upwards of £290m for the site, which sits at the very heart of the square mile. The 600ft tower itself is rightly considered to be the jewel in the crown of the 2.2 acre estate and offers buyers the opportunity to acquire one of the City’s undoubted trophy assets, however that doesn’t tell the full story as despite its iconic status, both the 47-storey tower and the broader area is in need of major redevelopment in the face of ever-increasing competition from a host of similarly sized multi-let office schemes that include both Heron Tower and the recently-refurbished 125 Old Broad Street.

The estate was last placed on the market in April 2010, at that time with a £300m price tag attached, however despite reported interest from the like of Gerald Ronson’s Heron International and the Chinese Estates Group, the sale was eventually withdrawn just four months later in August with BUKPF and HRE claiming that they would pursue a new ‘value-add’ strategy. Fast forward 12 months and that strategy has resulted in neither any development or letting activity, whilst the two property funds have had to reduce the asking price by a not-insignificant £10m. Whilst the global economic uncertainty will not have helped the sale price, the estate has several key areas that need to be addressed, which BUKPF and HRE have now decided is a job for somebody else.

The fundamental issue for the Richard Seifert-designed tower – formally opened by Her Majesty the Queen, Elizabeth II on 11th June 1981 as The National Westminster Tower – lies in its inherent design and the fact that it was built around a huge concrete core. Seifert designed the tower around the then-innovative concept of three hexagonal chevrons, which when viewed from above appears to show the NatWest corporate logo, whilst providing each of the main office floors with three distinct areas, or ‘leafs’ as they are now referred to. After NatWest vacated the building in the late-90’s, this leaf concept proved to be ideal for a multi-let approach with each leaf providing approximately 3,000 sq ft with a typical floor therefore of around 9,000 sq ft. Given the recent advances in the design of tall buildings, however - driven by the requirements of modern occupiers - the tower’s internal layout now compares unfavourably with the typical floor plan of 11,099 sq ft at nearby 125 Old Broad Street and up to 13,509 sq ft on the high rise floors of the Heron Tower, which has also now stolen the title of the City’s tallest building from Tower 42.

Internally, the building is also in need of a major refresh, despite the fact that some floors have now been refurbished with the rollout of LED lighting, among other initiatives. Only last week it was announced that City Credit Capital will vacate the 20th floor of Tower 42 for space in the Heron Tower, a situation that any new owner will be keen to halt. One option could be to carry out an extensive refurbishment of the tower as Hammerson did with the former London Stock Exchange, stripping it back to its concrete core and then recladding it in glass. This option would offer a cost effective solution to full-scale demolition and redevelopment, however whilst the NatWest tower is not listed, it is perhaps iconic enough for heritage groups to object to any refurbishment that would significantly alter the buildings external profile on the City’s skyline.

With ever greater emphasis placed on the public realm, recent City additions such as the Heron and Broadgate Towers have sought to maximise their interaction with the immediate streetscape, which only serves to highlight Tower 42’s fundamental weakness in this area. Despite an impressive all-glass entrance to the main building that fronts onto Old Broad Street, the estate, which also includes both 20 and 30 Old Broad Street, the plaza restaurant – currently let to the noodle bar chain, wagamama – 15 Bishopsgate and the lavish Grade I-listed Gibson Hall, is linked by a hopelessly outdated maze of dark and secluded steps and 60’s-style raised walkways.

In 2008, the London-based architects Studio Egret West worked up plans for the redevelopment of the estate, which saw an imaginative honeycomb structure replacing the lower-level elements of the existing site and opening up the currently underutilised Bishopsgate side, which is acknowledged as being key to any planned redevelopment given the arrival of several new towers in the not-too-distant future, with Bishopsgate viewed as a strategic artery between Liverpool Street and the Monument. That scheme was not taken forward, however and so the priority for any future owner remains to address the public realm around the tower – it was reported earlier this year that new plans were being worked up, yet with the sale announcement, this can be assumed to be on hold.

Given the current turmoil in the global economic markets, it is questionable whether BUKPF and HRE have chosen the best time to sell the estate, however they may well also have more than an inkling that they need to get shot of an asset that despite its trophy status, has something of an uncertain future given the recent slow-down in the City office market and a wave of new, high-profile rival buildings, all set to complete within the next three years and certain to provide the Tower 42 Estate with intense competition for occupiers, whilst bringing new destination restaurants and retail to the City. There can be no doubt that for some, the allure of one of the City’s trophy towers – the one that many say really kicked off the London skyscraper boom – will be simply too much to resist, however the question remains of whether or not it turns out to be something of a poisoned chalice.

Wednesday, 21 September 2011

International Firms Choose Village Life in the City as Ronson's Heron Tower Secures New Lettings

Despite a supposed slow down in demand for City office space, Heron International, the London-based developer led by the charismatic, Gerald Ronson and behind The Heron, the City of London’s most high-profile residential development, has announced a host of new lettings at its landmark multi-let office scheme, 110 Bishopsgate, the 230m tall tower that stands opposite Liverpool Street station, better known as Heron Tower.

Whilst joint letting agents CBRE and Cushman & Wakefield are only actively marketing the low rise floors at present – defined as those up to level 20 – just eight out of a total of 36 floors of Grade A office accommodation have been let in the 46-storey tower, the other 10 non-office levels being made up of plant, bar & restaurant and retail space. Several floors are known to be under offer, however with current tenant, McDermott Will & Emery set to exercise their option to take an additional 11,981 sq ft on floor 10, which will see them occupying the entirety of the three-storey, Village 3, firmly in line with Ronson's vision, whereby Heron Tower serves as the regional headquarters for anywhere between 20 to 25 high quality international firms.

Joining both the Chicago-based law firm and serviced office provider, Landmark Plc, who now occupy Village 6, across floors 17 to 19 are Partners Group, the private markets investment management firm based in Switzerland, who will swap the views from the 19th floor of the soon to be refurbished, One Angel Court for the 14th floor of Heron Tower, having signed terms to take 12,938 sq ft. City Credit Capital, the online FX (Foreign Exchange) and CFD (Contracts for Difference) broker will move from the 20th floor of nearby Tower 42 to part of the 12th floor after taking approximately 6,000 sq ft.

Chicago Trading Company, the derivatives trading firm will similarly move the short distance from the seventh floor of John Stow House at 18 Bevis Marks, which commands a rent of around £37.50 per sq ft, to the 16th floor of the Heron Tower where it has taken 11,969 sq ft. Finally, the Lithuanian bank, AB Bank SNORAS, which has maintained a London office on Lombard Street since November 2009, will move into the 20th floor, signing for 12,938 sq ft on what is the first of the high rise floors.

Whilst Heron International won’t reveal rental terms, it is thought that all four tenants are paying upwards of £62.50 per sq ft, which is impressive given the two major recent deals announced by British Land at 6 Broadgate and 122 Leadenhall Street respectively have both failed to break the £55.00 psf barrier. In the case of the Chicago Trading Company, it also shows the premium that firms are willing to pay for what is widely regarded as some of the very best space in the square mile.

Meanwhile, across the City on Silk Street, work on The Heron continues apace, with main contractor, Sir Robert McAlpine having now completed the main towers 36-storey concrete core. Given the residential nature of the building, concrete floor slabs have replaced the steel frame structure of the Heron Tower and these have now reached level 15. The elegant curtain wall cladding of clear, opaque black and dark grey glass, designed by David Walker Architects is following close behind and is now up to level eight. The £115m construction phase is due for practical completion in 2013.

Tuesday, 20 September 2011

Debenhams Pre-Lets 145,000 sq ft at British Land’s 10 Brock Street

British Land, the FTSE100-listed developer today surprised the markets by announcing that the UK’s leading department stores group, Debenhams plc has signed terms to pre-let 145,000 sq ft of office space at 10 Brock Street, in what is likely to be one of the largest deals in the West End office market this quarter. The 320,000 sq ft office building forms part of the London-based developers North East Quadrant (NEQ), which commenced construction almost a year ago, itself part of the wider Regent’s Place estate – an impressive two million sq ft mixed use development, masterplanned by Terry Farrell and Partners.

Debenhams, who earlier today announced solid sales growth in line with analyst expectations, currently occupy 1-2 Welbeck Street in the heart of London’s West End for their UK head office, which sits handily opposite the rear of the firm’s flagship Oxford Street store. The groups’ current lease, which costs them approximately £1.43m per annum, expires in 2013 at which point they will move the short distance up the road into 10 Brock Street, having agreed to occupy the ground to fourth floors on a 25-year lease without break.

For British Land it is yet another high-profile occupier to add to the impressive list of firms already located across the Regent’s Place estate, which is 98% let to the likes of the Russian energy company, Gazprom and Aegis Media. Debenhams will occupy about 40% of the Brock Street office building, which is due for completion – incidentally by one of the estates biggest tenants, Lend Lease – in summer 2013. Designed by the Clerkenwell-based, Wilkinson Eyre Architects, the 320,000 sq ft office scheme is planned around the concept of three glass towers of eight, ten and sixteen stories, linked by bridges across two full-height atria – a far cry from Debenhams’ Welbeck Street site.

Rental terms have not been disclosed but are likely to be in-line with recent West End letting deals of around £65.00 per sq ft, although Debenhams may have been able to extract a better deal given the commitment to an impressive 25-year lease without break. British Land also today confirmed that around 70% of the 172 luxury apartments within the Stephen Marshall Architects-designed block have been pre-sold to buyers. The 25-storey tower is to be clad with an innovative basket weave of aluminium, with the development set around a central courtyard that also makes use of novel maze landscaping.

Debenhams’ Welbeck Street site, which was purchased off-market for £36m in March this year by the Scottish Widows Investment Partnership (SWIP) on behalf of Scottish Widows Unit Funds, is itself due for redevelopment, with planning permission granted by Westminster City Council for a 53,100 sq ft mixed use scheme. The existing early-1960’s building will be demolished - with the exception, somewhat bizarrely of part of the facade that fronts a listed staircase - to be replaced with a new nine-storey building. 

Friday, 19 August 2011

British Land and Blackstone start demolition of 4 and 6 Broadgate to make way for new UBS London headquarters

After the Secretary of State for Culture, Olympics, Media and Sport, Jeremy Hunt confirmed in June that he had decided not to list British Land and Blackstone’s Broadgate Estate in the City of London; the UK-based property developer has moved to appoint John F. Hunt Demolition responsible for tearing down both 4 and 6 Broadgate, in readiness for construction of the 700,000 sq ft 5 Broadgate office development, which will be occupied exclusively by Swiss bank UBS as their new London HQ.

The Essex-based demolition contractor has already started the soft strip of the now-vacant interiors, having erected the usual perimeter hoardings and scaffolding, clad in fire retardant Monaflex sheeting –fondly referred to as the white sheet of death. Work will take place between 08:00 and 18:00 Monday to Friday and between the reduced hours of 08:00 and 13:00 on Saturdays with the entire demolition works set to be completed within 52 weeks, prior to the start of basement works.

On 19 April 2011, British Land boldly announced that the City of London (CoL) Corporation’s Planning Committee had granted full planning permission for the development, however English Heritage subsequently recommended the entire 1980’s development for Grade II* listed status. For Blackstone and British Land this represented a major headache as unlike all of the other towers currently under construction in the square mile – 20 Fenchurch Street, The Leadenhall Building and The Pinnacle etc – 5 Broadgate was designed around the specific needs of a known client, UBS.

For commercial property developers in the City, large trading floors are viewed as an absolute necessity when it comes to attracting banking tenants, however nothing comes close to the four 62,000 sq ft trading floors that lead architect, Make has effectively designed 5 Broadgate around. Whilst controversial, the building is anything but a typical office development, which means that if Jeremy Hunt had decided to list the site then UBS would have been left with very few alternatives.

For the CoL Corporation, who lobbied hard on behalf of the development, it was effectively last chance saloon as they knew only too well that the only viable alternative open to UBS in the event of Broadgate being given listed status would almost certainly have been a move to the dreaded C word, Canary Wharf – with JPM’s consolidation at 25 Bank Street set to start this year, UBS and Deutsche Bank are the only truly global banking groups that remain in the City. Any notion that UBS may have ever looked to leave London should be dismissed as nonsense.

As a result, Canary Wharf Group (CWG) were known to be actively monitoring the situation, as in 1 Bank Street (formerly Heron Quays West) they still have a building with planning permission that could comfortably accommodate UBS – the Swiss bank have been linked with a move to Canary Wharf several times but have always chosen instead to remain in the City. The part 12, part 21 and part 33-storey, Bank Street building however, boasts trading floors of up to 87,500 sq ft and with 1.3m sq ft of space would have allowed UBS to consolidate its London staff into one site.

The speed with which demolition has since commenced underlines British Land’s urgency to get the site pulled down before the potential for any further delays. Whilst the Broadgate Estate is now joint owned with Blackstone, UBS is still the REIT’s single largest office customer by some distance, worth around 3.8% of the group’s total rent, which for the full year ended 31 March 2011 stood at £518m, meaning that UBS paid BL around £19.7m last year, money that they could simply not afford to lose.

Monday, 8 August 2011

Canary Wharf Group announce construction restart at 25 Churchill Place as European Medicines Agency pre-lets 250,000 sq ft

Canary Wharf Group (CWG) surprised the markets this morning when it announced that the European Medicines Agency (EMA) has agreed to pre-let 250,000 sq ft, or approximately half of the total space in 25 Churchill Place, the final piece in the original Canary Wharf jigsaw puzzle. The 20-storey building, which will stand directly opposite Barclays global headquarters has already been constructed to basement level, however after the American insurance and reinsurance giant, Aon walked away from a deal, the site has laid dormant for several years with three schemes of varying height since worked up.

In a telling sign of the underlying confidence that is driving the London commercial property market, CWG – well known for their conservative approach to construction on the Docklands estate – has opted to develop what they term the 'high rise' option at 25 Churchill Place, which consists of a Kohn Pedersen Fox (KPF) designed tower of 20-storeys, which will offer approximately 550,000 sq ft of Grade A lettable space. EMA has agreed to take the promenade, ground and the first nine office floors with the option on a further four levels, each of around 27,400 sq ft.
In keeping with several recent deals by CWG, EMA – responsible for the evaluation of medicines developed for markets in the European Union – is already located in the Wharf, currently occupying space at 7 Westferry Circus, which they will vacate once construction, which will be carried out by Canary Wharf Contractors (CWC) is completed. The EMA will pay just £46.50 per sq ft on a 25-year lease, which commences from 1 January 2015 without break, which translates into minimum revenue of £290m over the term, which also includes upwards-only rent reviews every five years.
The deal, which also includes a 37 month rent free period that will effectively be used to fund the internal fit-out of the building, highlights the long-standing financial benefits to firms of being based in Docklands as opposed to the City, where comparable rents are £55 psf – a premium of around 15% or an impressive £43m over the 25-year lease that EMA has signed for.
For CWG, this latest letting also represents another major step forward as it looks to modify the tenant mix on the estate from one of high finance to high-value firms in the oil and pharmaceutical industries. The recent letting of 187,000 sq ft of space at 40 Bank Street to Shell can be seen as another key indicator of this new strategy, which in theory reduces the risk of another Lehman-sized void left on the estate given the continued economic challenges that the banks face.
Tower-cranes will return to site in the final quarter of this year, with CWG also confirming that it is now in active discussion with several commercial lenders as it seeks to fund the construction phase. The group will look to let the remaining floors as the building takes shape and will be keen to ensure a 100% occupancy rate given that several buildings on the estate, including both 5 Churchill Place and 30 North Colonnade remain only part-let with a combined availability of over 400,000 sq ft. This element is hugely important to CWG, whether they directly own the asset or not as they look to maintain rent levels across the estate by ensuring the supply of space does not outstrip demand.

Sunday, 7 August 2011

The Leadenhall Building rises as Laing O'Rourke secure square miles most sought-after contract

British Land and its joint venture partner, Oxford Properties have finally confirmed that construction of their iconic 47-storey tower, The Leadenhall Building will be carried out by UK engineering group, Laing O’Rourke, who have recently completed Hines’ nearby Cannon Place scheme in the City of London, which sits above Cannon Street station. The news follows a spate of construction starts in the City with demolition works for Great Portland Estates’ (GPE) 100 Bishopsgate now well advanced and Arab Investments stating that Brookfield will re-start work at the Pinnacle site, which will stand at the centre of what is a rapidly emerging cluster of tall buildings.

The role of main contractor was hotly contested within the construction sector, with Balfour Beatty, Bovis Lend Lease, Mace, Skanska and Sir Robert McAlpine all having submitted bids for the £318m contract, which will see the 224m tower reach practical completion in 2014 with construction having restarted in January this year. British Land has already successfully pre-let a massive 191,718 sq ft of space across levels four to 13 to the Chicago-based insurance and reinsurance giant, Aon who will consolidate from several City locations, having agreed to pay £55.00 per sq ft for the privilege, with an option on a further 85,273 sq ft on levels 14 to 18 should they need it.

The Rogers Stirk Harbour + Partners-designed tower, which will stand opposite the now-listed Lloyds of London building is viewed by many as the centrepiece of the City’s new skyline, which will be at various stages of construction by the time of the London 2012 Olympic Games in a year’s time. At 122 Leadenhall – set to be known as the Aon Centre post-completion – Laing O’Rourke will start by erecting a tower-crane on the basement level-three, which itself will be used to take down the existing red tower-crane in the northern section of the highly-constrained site. In total, four tower-cranes will eventually be in operation.

 Similarly, those walking along Leadenhall Street will soon notice the existing hoardings replaced and the access ramps – visible through the site access doors – removed to allow for construction of the basement levels up to the ground floor concrete slab. At this point the distinctive steel mega-frame, which also provides the tower with its impressive atrium, will commence construction. The steel superstructure, which is set to be built around a T-shaped strong-box in the centre of the building, will follow soon after. Unlike on most sites however, the service core to the north of the building, which houses the high-speed lifts and plant, will be installed ahead of the steel owing to its modular design and manufacture, which should see the tower race up ahead of rivals.

The Leadenhall Building looks set to be a showcase for British design, engineering and construction, however at its heart remains a commercial proposition and both British Land and Oxford Properties will be keen to let the remaining space in the building at a price significantly ahead of the £55.00 psf that Aon will pay to ensure its long-term financial viability. British Land has seen its share price underperform in recent months when compared against Land Securities, who themselves are pushing ahead with construction at their nearby 20 Fenchurch Street site and so will be looking at tenants for the more lucrative upper floors, which demand a hefty premium.

One such potential tenant is the FTSE100-listed, RSA Insurance Group who British Land has dealt with before when RSA took space in Plantation Place. The insurer is said to be considering the rest of the floors at The Leadenhall Building as they will likely have to vacate their current office, all 109,000 sq ft at Leadenhall Court – itself a mere stone’s throw away from the new tower – as new owner Hammerson looks to redevelop the site, possibly with a tall building. British Land will know that RSA already pay £65.00 psf at 1 Leadenhall Street so will be looking at a decent premium.

As cranes battle with steel superstructures on the City’s skyline, the square mile will be transformed as developers look to provide the Corporation of London with the large floor plates and tall buildings that it needs to at least try and halt the flow of banks and financial institutions to Canary Wharf and while British Land are battling with Hammerson, GPE and Land Securities for those all important signatures, we now know that it will be Laing O’Rourke that are building the beauty itself, 122 Leadenhall.

Tuesday, 24 May 2011

PwC linked to London Bridge return with 430,000 sq ft pre-let at Sellar Group's The Place

In an incredible twist, PricewaterhouseCoopers (PwC) may be about to pre-let up to 430,000 sq ft of space at The Place, part of Sellar Group’s high-profile London Bridge Quarter development that also includes the UK’s tallest building, the iconic 87-storey Shard. Any deal would see the UK’s leading professional services firm return to London Bridge after its former offices, Southwark Towers were demolished to make way for The Shard.

The 18-storey Place development is currently under construction and set for completion in the first quarter of 2013. Penned by Renzo Piano, it will be linked to its taller brother by a new public piazza and offers highly-flexible floorplates of up to 31,000 sq ft, which are likely to appeal to PwC who are slowly moving away from the traditional cellular layout. CB Richard Ellis and Colliers International are the appointed leasing agents for the building.

PwC employs over 8,000 people in London with 5,500 of those based at the nearby 7 More London, adjacent to City Hall. The remainder are spread out across offices that include One Embankment Place, which sits above the platforms of Charing Cross station, Plumtree Court in London’s midtown and several smaller outdated offices in the SE1 area.

PwC are known to be keen to exit One Embankment Place whilst Plumtree Court was recently acquired by Goldman Sachs with a view to long-term redevelopment. Having all of its London-based employees working out of just two buildings would also see PwC mimic similar consolidation across the big four auditing firms, with KPMG moving 4,000 of its partners and staff east to the 400,000 sq ft, 15 Canada Square office development in Canary Wharf whilst Ernst & Young have also recently consolidated into 1 More London.

Friday, 20 May 2011

Land Securities looks to residential with plans for Portland House as high profile London developments lead the recovery

Land Securities, the UK's largest commercial property company this week announced knockout financial results for the year ended 31 March 2011, fuelled mainly by Central London developments, which should come as no surprise given the sheer number of high profile schemes that the company is actively involved in. The developers total London portfolio, valued at £5,735m was up 10.8% overall with the likes of 30 Eastbourne Terrace, W2 up 24.2% and 62 Buckingham Gate, SW1 up an impressive 28.6%. An increase in demand for both high quality retail and office space in the capital, coupled with a highly constrained market has also driven like-for-like rental growth of 9.5%, contributing to group pre-tax profit for the year of £1,227.3m, up 14.8%. The markets certainly liked what they heard with Land Securities share price ending the day on Wednesday up 6.4% at 797.5p.

It is perhaps the insatiable demand for prime residential space in London that has taken even Land Securities by surprise, with the predominantly office focused developer announcing that just five of the 59 private apartments at its Wellington House, SW1 residential development remain available. The 54 units already pre-sold have generated £71.1m against total expected development costs in the region of just £55m, which already represents a mightily impressive 40% return. The 10-storey development, drawn up by John McAslan + Partners is expected to complete in July 2012 with concrete pouring of the fourth floor currently taking place on site.

As tipped by this blog in January of this year, the developer has also confirmed that the 29-storey Portland House, perhaps the last bastion of sixties architecture still standing in Victoria is set to be converted into residential apartments. The 297,000 sq ft office block, which is divided up into 27 floors of exactly 11,000 sq ft is currently multi-let to a broad spectrum of occupiers on a range of short-term leases, unlike much of the groups London office portfolio, which is typically let on long leases to large blue chip occupiers. Land Securities has signalled that future plans will see the building extended to around 393,000 sq ft; however it is unclear whether this will mean building upwards, whilst completion is not expected until 2018 at the earliest.

The £150m refurbishment of 121 Victoria Street is well underway with the unusual building that dates from the 1970's about to disappear completely under protective white sheeting, which will allow for the existing grey/red granite cladding to be cleaned and the stainless steel window frames polished, whilst the current bronze glass will be replaced with a high performance neutral alternative. Citing an intense shortage of new developments in the West End office market, Land Securities are aiming to return the 227,000 sq ft office scheme back to the market by June 2012, with Microsoft already seen as a potential occupier as it seeks expansion space.

With the identical 171 Victoria Street not part of the refurbishment plans, it now seems certain that this building, currently the head office of John Lewis, will meet with the wrecking ball in the next few years to make way for a new development. This has already been the case with the similarly drab Selborne House, which was demolished last year and will be replaced by what Land Securities have renamed 62 Buckingham Gate, a striking 13-storey glass tower penned by Pelli Clarke Pelli that will deliver approximately 252,400 sq ft of office accommodation and ground floor retail, seen as essential given the areas high footfall. Demolition and excavation of the basement is now nearing completion and concrete works are underway with contractor Sir Robert McAlpine set to complete construction in spring 2013 with total development costs expected to be around £185m.

The final piece of the Victoria Street jigsaw for Land Securities is Kingsgate House, another throwback from the sixties, which the developer wants to demolish and replace with two separate buildings, designed around a central courtyard by Lynch Architects, a relatively small London based practice who have already worked extensively with the developer in the Victoria area but on smaller schemes. The new mixed use scheme, which has already been submitted to Westminster, will comprise 341,000 sq ft of office, residential and retail space that includes 102 private apartments, boasting views out across St James's Park and the West End. Land Securities will take vacant possession of the site, currently home to the UK Department for Business, Innovation and Skills in March 2012 with demolition expected to commence soon after for completion in around 2015.

Leaving the West End and returning to the City, Land Securities are already on site at their three consented schemes, 20 Fenchurch Street, EC3, 120 Cannon Street, EC4 and 30 Old Bailey/ 60 Ludgate Hill, EC4, underlining the phenomenal London development pipeline that the UK's largest REIT is currently committed to. Unlike British Land however, who earlier this week were able to confirm that Aon has pre-let 191,000 sq ft of space at 122 Leadenhall Street, no such major letting news was forthcoming from Land Securities, who were known to be vying for the insurance giants signature at 20 Fenchurch Street, their 50:50 joint venture with the Canary Wharf Group (CWG). With completion not expected until April 2014 however and the developer known to want a rent of at least £59.50 per sq ft, time is not pressing quite yet on the £500m development.

With K&L Gates now having vacated their previous home at 110 Cannon Street and moved to One New Change, Land Securities has commenced the refurbishment and extension of the existing 75,020 sq ft of office space, which is set to include the provision of a new glass canopy for the main Cannon Street entrance, the replacement of the north, east and west facades at ground, first and second floor level and the infilling of the second floor terrace. It is expected that the refurbished space will be back on the market by March 2012 when prime City rents are expected to hit £62.50 per sq ft. The building essentially acts as a stop gap in Land Securities' City portfolio before the likes of 20 Fenchurch Street come on stream in 2014, delivering a massive 638,732 sq ft of new office space to the market with expansive floor plates of up to 27,336 sq ft alone.

At 30 Old Bailey/ 60 Ludgate Hill, EC4, effectively where the City meets London's midtown, demolition contractors have started on site and are in the process of stripping out the interiors of the two dated 1960's buildings that occupy the current site, with full demolition expected to start soon. This approach is something of a recurring theme in Land Securities' development plans, which shows the profitability that can be achieved from buying old and building new. Designed by Fletcher Priest and Sauerbruch Hutton, with the former also currently employed as architects on the redevelopment of One Angel Court in the City, the new scheme will again feature two distinctive offices and a remodelled public space at street level, something that the current area is crying out for, despite its proximity to St Paul's Cathedral. Full construction is expected to complete in December 2013.

Looking beyond 2015 and the developer still has over 1.5m sq ft of new space with planning consent, split between One Arundel Court, WC2 and the 910,000 sq ft Victoria Transport Interchange II mixed use scheme, which has now been rebranded as Victoria Circle and is part of a massive transformation of the area around the Network Rail-owned station. As part of that work, the Underground station will see a vast new ticket hall built to serve the Victoria line platforms and alleviate congestion, with demolition hoardings going up this week. By 2018 Land Securities will have built an incredible 4.35m sq ft of new office, residential and retail space in Central London alone, which coupled to massive investments by the likes of British Land and Hammerson also means that the future for London looks brighter than ever.

Thursday, 19 May 2011

Google UK's 160,000 sq ft letting means colourful Central Saint Giles development now fully let

In the West End’s single biggest letting deal of the year, Google UK has taken a massive 160,000 sq ft of expansion space at Central Saint Giles, WC2H, the mixed use scheme penned by Renzo Piano, the same architect responsible for the Shard. The development, by Legal & General Property (LGP) and Mitsubishi Estate Company, which features a vibrant glazed ceramic facade very much in keeping with Google’s own colourful logo is now fully let and has attracted a broad range of media and technology companies since it was launched onto the market exactly a year ago in May 2010.

The internet search giant will join British media firm, Mindshare, who took 77,928 sq ft across the seventh and eighth floors back in December 2010 for their worldwide headquarters, as well as Universal Pictures International who will occupy the first, second and half of the third floor, which they will share with Google who themselves have taken the entire fourth, fifth, and ninth floors and part of the third and sixth floors. LGP will not disclose exactly how much Google will pay for the space but it is thought that rents are around £65.00 per sq ft, which is in line with market values.

The news will come as a bitter blow to Argent, who had hoped to lure the American firm to their giant King’s Cross Central development, which will eventually deliver over 3.4 million sq ft of new and refurbished space, with Google once rumoured to be considering an office development of up to 700,000 sq ft. Quite what they were planning to do with that amount of space remains a mystery as indeed does the 160,000 sq ft of space just signed for, which according to Matt Brittin, MD of Google UK will be occupied by just ‘some’ of Google London teams, who currently work out of offices in Buckingham Palace Road in Victoria, which are shared with American Express. Fit out on the new space is expected to start almost immediately and will be in line with Google’s creative style.

Google’s now likely UK expansion is something that will certainly please David Cameron and the coalition government who have worked hard to promote the capital as a hub for growth firms in creative industries such as technology and new media, which recently saw Twitter decide to locate in the UK. It’s also great news for London’s office market, which is enjoying a bumper week of lettings.

Aon first out of the blocks in the City space race with 191,000 sq ft letting at 122 Leadenhall Street

After a fairly static first quarter for major lettings in the City, British Land and Oxford Properties, this week gave the square mile a much needed shot in the arm when they announced that Aon Limited, the UK arm of the giant US insurance and reinsurance broker, Aon Corporation has selected The Leadenhall Building at 122 Leadenhall Street as its future London headquarters after months of speculation. Aon has fully committed to take 191,718 sq ft of space across levels four to 13 but may choose to exercise an option to take a further 85,273 sq ft on levels 14 to 18 should it need to. 

ith the Richard Rogers designed tower standing directly opposite Lloyds of London, Aon will be firmly at the heart of the City’s insurance district, an improvement on their current home within three buildings at Devonshire Square and the four floors that they share with Brit Insurance at 55 Bishopsgate. The new corporate space will be known as The Aon Centre, which is likely to please British Land’s Chief Executive, Chris Grigg who is known not to favour the buildings current nickname of the Cheese Grater. British Land were unable to confirm the rental levels agreed ‘due to confidentiality of the agreement’, however sources reckon that Aon will pay the current market rate for prime space of approximately £55.00 per sq ft, which guarantees the joint venture between British Land and Oxford Properties a healthy minimum annual income of over £10.5m.

Undoubtedly for the developers, the real money will come later when the remaining 27 levels of lettable space are taken at likely rents of up to £70.00 psf for the upper floors, which will provide commanding views out across the City. For British Land the Aon deal therefore represents something of a short-term success, providing a guaranteed income stream once the building completes in mid 2014 and allowing them to wait for rental levels to improve on the back of increasing demand. It also removes one of just a handful of major firms with space requirements over 200,000 sq ft, which will only serve to increase the pressure on the likes of Arab Investments to secure a pre-let at the Pinnacle as soon as possible, particularly with 100 Bishopsgate set to rise early next year.

The deal also serves to highlight the underlying strength of the City office market and its incredible recovery from the recent global economic crisis. It is worth pointing out that British Land only announced in October of last year that they would be restarting the project after many thought that the truly iconic 224m tower was destined to join The Minerva Building as one of the best tall buildings never to be built in London. Fortunately it’s now very much full steam ahead.

Tuesday, 3 May 2011

Bank of England set for historic return to New Change

The Bank of England (BoE) are said to be close to taking just over 100,000 sq ft of space at Land Securities’ immensely successful mixed use scheme, One New Change in the City of London. With the FSA’s successor, the Prudential Regulation Authority (PRA) set to come under the direct control of the BoE from mid to late 2012 the plan is to have those staff move from the FSA’s current headquarters in Canary Wharf to the City, in close proximity to the Bank’s historic Threadneedle Street home and Drivers Jonas Deloitte (DJD) has already been appointed to search for space.

Up to four schemes are said to have been in the running, including Minerva’s Walbrook, which astonishingly still remains empty and has done now since February 2010; IVG’s 20 Moorgate, which has up until recently been the home of the legendary City investment bank, Cazenove; and 95 Gresham Street, which offers 93,606 sq ft of Grade A office space just moments from the BoE’s current home. Whilst One New Change may be the furthest away from the ‘Old Lady’ of Threadneedle Street at just a couple of hundred yards, it is still deemed to best meet the future requirements of the UK’s central bank.

With the recent letting of 34,558 sq ft on the second floor to SMBC Nikko Capital Markets Limited, the 340,765 sq ft office scheme is now approximately 73% let with the derivatives firm joining several other high profile clients, which include Friends Provident who had previously taken 48,767 sq ft on the same floor, along with the Chicago Mercantile Exchange and K&L Gates, the anchor tenant who took around 120,000 sq ft on a pre-let, paying £61.50 per sq ft way back in October 2007, prior to the credit crunch.

Land Securities have stated that average office rents at the development now stand at an impressive £57.50 psf, which is indicative of what the BoE will likely have to pay the London based developer to secure the remaining 100,080 sq ft of available space, which is highly sought after despite a glut of new space available on the market with the completion of several notable schemes including the Heron Tower and Hines’ Cannon Place. The available space is split between the third and sixth floors, with just 8,908 sq ft of space on the upper level.

Should the bank sign on the dotted it will mean that Land Securities will have fully let the 550,000 sq ft mixed use scheme just six months after opening in October 2010, highlighting the sites immense appeal to both high-end retailers and office occupiers alike. It will also see the BoE make a return to the area, with the previous New Change buildings having been built for the bank in the 1950’s, ironically for exactly the same purpose as today’s requirement, to provide additional space given the constraints of their existing Grade I listed offices.

Tuesday, 15 March 2011

Aon aim for 122 Leadenhall Street letting but British Land set to hold out for higher rent

Rumours continue to circulate that the insurance and reinsurance broker, Aon UK is set to take approximately 200,000 sq ft of office space at 122 Leadenhall Street, British Land’s high profile City of London office scheme, which is currently being built on a speculative basis as part of a £340m joint venture with the Oxford Properties Group. It has been stated that Aon are set to pay anywhere up to £52.50 per sq ft for the prestigious space, which is below the current market levels for prime space in the City of £55.00 psf and on the amount of space being talked about is the equivalent of £500k per annum in lost rent. When asked to comment, Aon’s Head of Communications dismissed the recent story as “pure speculation”; whilst British Land merely reiterated that they will only announce confirmed agreements.

With any office development there is always a large element of risk that sits with the developer, principally that they will fail to find a tenant, which is their primary source of income and ultimately allows loans linked to the project to be repaid. One way to mitigate against that risk is to only push ahead with full construction once a large pre-let has been signed, which is the strategy adopted by Canary Wharf Group (CWG) to great success in recent years. Most major lenders will stipulate that a pre-let is achieved before they provide development finance, which is causing Arab Investments its own headaches at the nearby Pinnacle site. Whilst a pre-let will guarantee future income, in a rising market such as that of the City of London, by the time the development has completed, rental values could very easily have increased by 33% meaning potential loss of income for the developer.

British Land has therefore chosen to take an alternative route and enter into a 50:50 JV whereby the development risk is shared equally with its partner, Oxford Properties Group, an option that is becoming increasingly more attractive to the major developers in the face of a continued lack of available finance from the banks, yet coupled with a rising demand for new space from prospective occupiers. Given this situation and with 122 Leadenhall Street not set to reach practical completion until the second half of 2014, British Land is therefore in absolutely no hurry to sign prospective tenants up in the face of a chronic shortage of prime office space in the City and an ever-increasing number of high quality tenants commencing searches as their existing leases expire.

Put simply, British Land will know full well that they are building the most iconic tower in the City since the Gherkin and as such can almost certainly achieve far in advance of the rental values currently being discussed. King Sturge reckon that prime City rents will hit £62.50 psf this year and £70.00 psf by 2013 so for British Land to offer around a third of the total space within the building at £52.50 psf would seem to be pretty illogical for one of the shrewdest developers in London, especially given that they recently pre-let 5 Broadgate to UBS for £54.50 psf. The terms of that deal agreed with UBS were already seen as extremely competitive, a result of the fact that the Swiss bank is currently the largest tenant at Broadgate and could very easily have left for a new home in Docklands as was being rumoured, effectively meaning that a deal had to be done given the potential impact on British Land’s own share price and its future strategy for the Broadgate Estate.

On the flip side however, such a deal would be a major coup for Aon, given the direction that prime rents are set to head and the towers location at the heart of London’s insurance industry. The Chicago based broker refused to even confirm whether it is actively looking for space in the London market, however British Land has previously put its requirement at between 130 and 180,000 sq ft.

The City of London is lucky enough to have several of the highest quality buildings yet seen in the square mile either under construction or set to start imminently including 100 Bishopsgate, 20 Fenchurch Street, London Wall Place and the Pinnacle, all of which will break the 500,000 sq ft mark and none of which currently have confirmed tenants. Land Securities has already told investors that it is looking to achieve at least £59.50 psf at 20 Fenchurch Street, which would appear to be a more realistic number. British Land of course may simply be looking to let the lower floors of 122 Leadenhall Street for a seemingly low rent, safe in the knowledge that the real money will come from letting the upper floors, which will boast some of the best views of London and be of instant appeal to the many smaller boutique firms that operate in the City’s banking and insurance sectors.

For Aon, who currently occupy around 279,000 sq ft of space in the City within three buildings at 8, 10 and 11 Devonshire Square and across four floors of 55 Bishopsgate, with leases expiring in 2018 and 2023 respectively, there is no rush to move but the firm may well have its eye on a pre-let rather than wait before rents potentially hit £70.00 for the very best quality space in 2013 and 122 Leadenhall Street is undoubtedly the prize office scheme in the City right now. Ultimately for British Land however, it’s about finding the right balance between risk and reward, the four schemes mentioned above will deliver well over 2 million sq ft of space into the market in or around 2014, at a time when competition is expected to be fierce, so it won’t want to leave the building un-let until then, but letting Aon take 200,000 sq ft at the jewel in their City of London crown for a measly £52.50 psf today surely doesn’t make commercial sense. Let’s wait and see.

Sunday, 13 March 2011

Refurbishment of 20 Cannon Street gets underway in the City

In the race to deliver much needed space back into the City of London office market in the short-term, prior to the arrival of major developments such as 122 Leadenhall Street and 20 Fenchurch Street in 2014, property development and investment company, Allied London is now on site at 20 Cannon Street, a dated 1960’s block that has sat empty since 2008 when it was vacated by the law firm, Herbert Smith who has since moved to British Land’s Exchange House, part of the Broadgate estate. The extensive refurbishment will see approximately 45,000 sq ft of prime space brought back to market in late 2012, which means that 20 Cannon Street will be competing directly with the likes of Land Securities’ nearby refurbishment at 110 Cannon Street.

Penned by the Australian architects, Denton Corker Marshall, perhaps most famous in the UK for their award winning Civil Justice Centre in Manchester’s Spinningfields district, the refurbishment works will see the existing concrete structural frame, lift and stair cores, and part of the existing black granite facade along Bread Street retained. The main change will come from the complete replacement of the existing cladding that dates from an earlier refurbishment in the 1980’s and consists of a series of gantries and metal balustrades, with a new panellised and fully glazed curtain wall, which also includes a copper mesh solar screen on the South facade.

In order to improve the street presence and identity of the building, the north-west corner, which is closest to St Paul’s Cathedral, will be cut away at ground level to create a new external covered entrance. The basement level will be converted for use as a restaurant with a separate entrance off Friday Street. The planning application was approved by the City of London (CoL) Corporation back in December 2010 and the white sheets of death have now risen as work gets firmly underway.

Thursday, 24 February 2011

Santander linked to space in Minerva's Walbrook building

Santander UK plc, the UK arm of the Spanish banking giant, Banco Santander, S.A. is rumoured to be in advanced talks with Minerva plc to take space in its Walbrook office scheme in the City of London, which will come as welcome news to the developer, as the prestigious office development has now stood empty for exactly a year since it was completed in February 2010.

The Walbrook offers potential occupiers 382,786 sq ft of Grade A office space, standing directly opposite Cannon Street Tube station and just a stones throw from the Bank of England (BoE), who themselves have also been rumoured to be considering taking space in the development. The BoE option seems unlikely however – unless this is for short-term space – given that Driver Jonas Deloitte has only recently been instructed to consider options in the City for the Prudential Regulation Authority (PRA), which will come into being in mid to late 2012. Minerva is known to be directly marketing the building to potential occupiers whilst actively engaging in discussion with those firms that have a known space requirement.

Unlike almost all of its competitors who are located in either Canary Wharf of the City, Santander is currently headquartered at 2 Triton Square, a 200,000 sq ft building, which fronts onto Euston Road and was developed by British Land as part of their Regents Place mixed use scheme before being sold to the Spanish group for just £115m in April 2009 as part of the developers bid to reduce its debt. If the rumours are correct then it would seem that the banks new Chief Executive, Ana Patricia Botín clearly sees advantages to being located in the City in what is a notably high quality building.

The first and second floors of the Walbrook were specifically designed to meet the specialised dealing functions of a major investment bank, with up to 647 trading positions on the second floor alone, which it was hoped would make the building more attractive to potential tenants and so command a higher rent. This is unlikely to be of interest to Santander however, who are primarily a retail bank in the UK and so it would seem more likely that the group could potentially take up to 277,493 sq ft on the upper floors, paying at least £55.00 per sq ft for the privilege. This would still leave the dealing floors available, which benefit from their own entrance off Bond Court and would likely interest a smaller investment bank.

Whilst Minerva issued a statement via the London Stock Exchange (LSE) in response to the speculation, which stated that the developer 'remains in ongoing discussions with a number of prospective tenants and will provide an update, as and when appropriate', Santander would only say that they 'do not comment on media speculation'. Ultimately, Minerva, whose share price has continued to hover just shy of the 100.0p mark since the news broke, desperately needs to let the Walbrook and whilst Santander may not take the entire building, seven floors are better than none.

Thursday, 17 February 2011

FSA’s 500,000 sq ft Docklands space requirement in doubt as Driver Jonas Deloitte starts City search

The Bank of England (BoE) has confirmed that the Financial Services Authority's (FSA) planned successor, the Prudential Regulation Authority (PRA), which is set to come into being by mid to late 2012 will now almost certainly be housed close to the Bank of England's current headquarters on Threadneedle Street in the City. Previously, it was thought that the FSA was keen to retain its headquarters in Canary Wharf and had been linked with taking 500,000 sq ft at Riverside South in the event that JPM choose not to occupy the office development, which is currently under construction.

Approximately 3,800 people currently work for the FSA in London, where the regulator leases 362,475 sq ft across the whole of the 25 North Colonnade building. An additional four floors of space are also occupied by the FSA at One Canada Square, totalling over 136,000 sq ft. The various leases across both buildings all expire in November 2018, whilst two floors in One Canada Square are known to have break options at year five.

Both the BoE and FSA stated that it was too early to say how many people will move to the PRA as consultation is still ongoing, whilst it also remains unclear as to where the new Consumer Protection and Markets Authority (CPMA) will be based. Despite acknowledging that it was very early days, the BoE has confirmed that Driver Jones Deloitte (DJD) has been instructed to commence a search, however there is no specific space requirement at present.

If both the PRA and CPMA are to be housed in a single building then this will need to be around 500,000 sq ft, which leaves several options in the City. Given the existing ties to the Canary Wharf Group (CWG), the Docklands developer may look to engineer a deal at 20 Fenchurch Street, whilst other alternatives include Hammerson's nearby London Wall Place. A more viable and perhaps more likely scenario is that the two regulators occupy separate buildings, with the PRA probably looking at around 300,000 sq ft, which would still prove a coup for the City office market.

Thursday, 3 February 2011

HSBC confirms One Canada Square letting as expansion space as London looks set to remain as the banks global headquarters

HSBC has confirmed that the three floors of space it recently took at One Canada Square are to support the banks long-term expansion plans in London and not part of a planned refurbishment of their current headquarters at 8 Canada Square as had been rumoured. The global banking giant took 82,158 sq ft of space across floors 7-9 in the third quarter of 2010, paying £40.00 per sq ft on a five-year lease. Prior to their move to 15 Canada Square, the space was previously occupied by KPMG before being stripped to shell and core by Canary Wharf Group (CWG).

Despite the triennial review of where the bank should be based currently taking place behind the scenes, HSBC confirmed that London remains the global headquarters for the group with the FSA as its lead regulator. The firm also dismissed recent media speculation that they are set to relocate their head office to Hong Kong as a 'red herring', focusing instead on the distinct advantages that London offers the group in terms of a solid legal structure and a time zone, which allows HSBC to trade with all of the major markets throughout the day.

Despite the introduction of the UK Bank Levy last month, which will have a direct impact on the banks balance sheet, HSBC's Chairman, Douglas Flint this week went as far as telling the Treasury Select Committee that:
"We're not trying to leave... no other city in the world has quite the unique competitive edge that London has" citing the fact that London maintains "the market share lead in interest rate derivatives, foreign exchange... and where the market is with the greatest liquidity", which Flint confirmed as being vitally important to HSBC in all of the markets in which the bank operates.

lint also offered an update on this years bonus pool, which will be in the order of $2bn (£1.2bn) on the back of a total $150m pay increase for some of HSBC's investment bankers, which would suggest that the perceived threat of top talent jumping ship to rival financial centres is a very real one and that the major banking groups are having to pay out more to retain their best staff after a clampdown on bonuses. The news should come as welcome boost to London however, as its looks to maintain its crown as the global financial centre of choice for the worlds biggest banks.

Wednesday, 2 February 2011

Clock ticks for Minerva as Walbrook building remains empty after 12 months

For all its recent problems with rebel shareholder Nathan Kirsh, shares in Minerva Plc, the property investment and development company have risen steeply in recent weeks after the firm confirmed that it was in preliminary takeover talks with an unnamed bidder, thought not to be Kirsh who is chiefly unhappy at the Minerva management teams perceived inability to find tenants for either of its City of London office developments, the Walbrook and St Botolphs office schemes, which as of 30 June 2010 had a combined valuation of £486.5m.

The quality of the two buildings cannot be doubted yet by the time that Minerva updates the markets with its half yearly report, likely to be in the last week of February, the Walbrook, located directly opposite Cannon Street station will have stood empty for an unprecedented 12 months. With 382,786 sq ft of office space available across 10 floors that equates to an annual rent of approximately £21m that Minerva is now loosing out on at the Walbrook alone, based on the assumption that the developer could comfortably achieve the current prime City rents of £55.00 per sq ft for what is arguably some of the highest quality Grade A office space available.

Minerva's strategy for letting the Walbrook is open to question however. Originally the firm had stated that they were not prepared to take undue speculative risk and that a pre-let would be required prior to the commencement of the development, yet in 2005 confirmed that they were pressing ahead with a speculative build on the back of an improving City office market. Despite the collapse in demand for office space in the square mile as a result of the global economic crisis, by the time the building reached practical completion in February 2010, three major deals had been missed when BlackRock, Macquarie and Nomura all opted to take space, totalling well over a million sq ft in rival schemes with 'space' issues at the Walbrook being cited as the key concern.

This contradicts entirely however, the fact that the building, penned by Foster and Partners was always designed around the prospect of securing a major financial occupier, who it was assumed would require large trading floors, to the point that the Walbrook even has its own dedicated dealer entrance off Bond Court, which leads directly to two vast trading floors of 50,493 sq ft and 50,095 sq ft respectively that rival anything currently available in the City. It is known that Bloomberg, who themselves have now committed to the neighbouring Walbrook Square development considered the Walbrook for its new London headquarters but walked away from any deal on the back of Minerva over-negotiating.

Minerva will only go as far as to confirm that the developments are being actively marketed in a supply constrained market, supported by the fact that both the website and brochure for both the Walbrook and St Botolphs have recently been comprehensively updated indicating a major sales push, however they are now competing head-on with the likes of British Land and Land Securities for the signature of the City's major occupiers that have a known space requirement and are willing to sign a pre-let. Similarly, the schemes that have also recently completed such as Heron International's Heron Tower at 110 Bishopsgate are also managing to attract occupiers and pushing prime City rents above £55.00 psf.

A more pressing issue however, is that the development loans that Minerva has secured against both the Walbrook and St Botolphs contain leasing milestones, which require around two-thirds of the respective buildings to be let by the financial year ending 30 June 2012. Whilst this should be achievable at St Botolphs, where six of the 13 office floors are already let to international law firms Clyde & Co and Lockton, whether Minerva and its joint leasing agents, Knight Frank and CB Richard Ellis can secure a deal at the Walbrook in that time remains to be seen, which would have real financial implications for the firm, whilst the current office market in the City suggests that Minerva will also have to offer any prospective occupiers a rent-free period of around 36 months on a 15-year lease.

Few firms have been directly linked with the Walbrook building to date, which Minerva is keen to let in its entirety whilst the likes of Schroders, known to be looking for around 250,000 sq ft are now almost certain to commit to taking space in the Pinnacle. If the firm can find a tenant for the Walbrook, with Lloyds Banking Group still seen as a viable candidate, then it will ease the considerable pressure on Minerva's under fire management team and almost certainly lead to a further increase in the firms share price, which in mid-morning trading stood at 100.5p, valuing the firm at approximately £163.6m. Given the lack of progress made over the past year however, that would seem to be a big ask.

Tuesday, 1 February 2011

McDermott Will & Emery confirmed as Heron Tower's first tenant as Landmark Plc and Sushi Samba also take space

Following the news that Heron International has received planning permission for its mixed use scheme, Heron Plaza, the London based developer has finally confirmed that international law firm McDermott Will & Emery (MWE) will be the first tenant in the City's tallest building, the 46-storey Heron Tower at 110 Bishopsgate, EC2. The 230m tall development, penned by Kohn Pedersen Fox (KPF) is built around the innovative three-floor village concept with the 36 office floors formed of 10 three-floor villages and one six-floor village that provide a total of 442,928 sq ft Grade A office space.

The US law firm has taken 24,945 sq ft on the 8th and 9th floors of the landmark development, part of village three and will pay £55.00 per sq ft for the Grade A space, the highest rents seen in the City since prior to the global credit crisis. MWE has already appointed KKS Strategy as their interior architect and is expected to move into the building by the end of the first quarter, once main contractor Skanska has finished construction. The Chicago based law firm previously occupied 35,382 sq ft across five floors at nearby 7 Bishopsgate, which is currently undergoing major refurbishment.

Boutique serviced office provider, Landmark Plc has also been confirmed as having taken village six within the new tower, totalling 36,926 sq ft across floors 17 to 19. The firm currently has four prestigious sites in the City, three of which are Grade II listed and the other being the recently redeveloped, 125 Old Broad Street, where Landmark leases the 6th and 7th floors.

The remaining office space in the Heron Tower is expected to be let village by village or floor by floor to various international firms with the rental values that Heron can achieve for the top floors set to provide a clear indication of the strength of the City office market as prime rents are expected to push past £62.50 psf. The open plan office space within the tower is seen as particularly flexible for potential occupiers given that all internal services including 10 high speed double deck lifts have been located at the south side of the building.

Confirming the international appeal of both the Heron Tower and the City of London that Gerald Ronson, Heron's Chief Executive is so keen to promote, the New York based group, Sushi Samba, which fuses together Japanese, Brazilian and Peruvian cuisine, music and design will also open a branch of its very much in vogue restaurant concept across the top three levels of the Heron Tower, comprising 13,423 sq ft as well as an impressive 3,143 sq ft of roof terrace space. Two dedicated high speed scenic lifts at street level will whisk those looking to dine 175m above the City of London to the 39th floor from the dedicated restaurant entrance that fronts directly onto Bishopsgate.

Heron International has also stated that renowned restaurant operator Drake Morgan, who already run four sites across London including both the Alchemist and the Folly in the square mile, has taken 5,770 sq ft of space on the ground floor. The privately owned firm will open a 250-cover restaurant complete with two bars towards the end of May, which will be known as 'The Drift'.

Sunday, 30 January 2011

Construction continues apace at The Heron as demolition for Heron Plaza set to start shortly

Sir Robert McAlpine, the family-owned UK building and civil engineering company has been on site at Milton Court in the City of London since July 2010, constructing the 36-storey residential tower, The Heron for Gerald Ronson’s Heron International as part of a £115m development deal that will also deliver a new world-class home for the Guildhall School of Music & Drama on the lower floors, moments from the existing Barbican Arts Centre.

The residential-led scheme comprises the 8 floor Guildhall School of Music & Drama, which includes two basements levels and then a 28-storey residential tower above. Designed by David Walker Architects, the tower element, which sits at the eastern end of the site, will provide 284 city apartments, which range from the 398 sq ft Island Suite to the 1884 sq ft 3-bed apartment with the main entrance located on Moor Lane at the north eastern corner of the site, closest to Moorgate.

Incorporating a 608 seat concert hall, a 227 seat drama theatre and a 126 seat studio theatre, the school will occupy the entire site footprint. Sir Robert McAlpine has already commenced construction of the cores and the concrete superstructure frame that is built around it, with priority currently being given to the eastern side of the school, which the residential block will sit on and in particular the critical aspects of the structure that will support the seventh floor transfer level.

The eastern core is currently up to level five with the superstructure to first floor. Once that entire structure is completed to level seven however, then the residential towers core and superstructure will continue to roof level and the western end of the site will be constructed to roof level. Currently, the western end of the site is up to core level five with superstructure to basement level.

Three facade mounted twin passenger/ goods hoists, which will be used principally for external cladding and internal fit-out will arrive on site soon and will rise with both the school and tower elements. Despite the development not due to complete until 2013, Heron International announced in December 2010 that 150 of the 284 apartments had already been sold off plan. With the 230m tall Heron Tower now complete and Sir Robert McAlpine on site at The Heron, construction of the recently approved Heron Plaza is closer than ever.