Some Of The Largest Office Schemes Completing This Year Still Don't Have Tenants
Development is a slow-moving game where timing is key — and 2021 is not the best market in which to be completing a new office scheme.
New London office construction starts dropped 50% in the first six months of 2020, according to Deloitte’s London Crane Survey, as developers held off from pushing the button on schemes amid maximum uncertainty about occupier demand. But what about those schemes already in motion?
Here are the 10 largest schemes completing in London in 2021 and where they stand in terms of leasing, according to Deloitte data. Several of them go into the uncertain market of 2021 without a tenant.
The largest London office building completing this year has the luxury of already being largely leased. 21 Moorfields in the City is being developed by Landsec with Deutsche Bank having leased 469K SF of the 564K SF building before construction commenced.
CIT is redeveloping and extending the former Finsbury Tower office building in the City, adding 13 stories and giving it a rebrand — new name Hylo — and a focus on wellness. Staff working there will benefit from a building designed with lighting systems created to reduce fatigue, acoustics that encourage better concentration and communication, and air filtration to minimise ill health. So far, the 289K SF building, scheduled to complete in Q3, has no tenants, Deloitte data showed.
Duo, the new name for 280 Bishopsgate in the City, was bought by CBRE Global Investors, Arax Properties and King Street Capital Management for £180M in December 2019, at the height of uncertainty about whether the UK would reach a Brexit deal. The building was bought from RBS with vacant possession, with a view to it being redeveloped and re-leased. In July, law firm Baker McKenzie leased 153K SF of the building, leaving 127K SF of the 280K building SF still unlet ahead of completion in the fourth quarter of this year.
2 Gresham Street
St Martin’s Property, the property arm of Kuwait’s sovereign wealth fund, will this year have to work out what to do with the vacant and distinctive City Hall office building on the South Bank when the GLA vacates it in order to move east. And it has another large office building in the City to lease as well. Following the departure of South African bank Investec, St Martin’s appointed architect Buckley Gary Yeoman to undertake a refurbishment of the 178K SF 2 Gresham Street office building. Ahead of completion in Q2, the building remains unleased.
Gresham St Paul’s
About 200 yards up the road, Swiss pension fund consortium AFIAA and its development partner Stanhope are faring better at Gresham St Paul’s, their refurbishment of a 170K SF scheme. It is almost fully leased, with financial services firm Smith & Williamson having taken 100K SF and stockbroker Numis leasing 50K SF.
Brookfield bought Citygate House in the City from media company Bloomberg for £90M in 2015 and leased it back to the media company for a couple of years before undertaking a major refurbishment, with architect Stiff + Trevillion appointed to oversee the process. Due to complete in Q3, the 170K SF building, the facade of which dates back to the 1930s, remains unleased.
25 Cannon Street
Breathing easy on this list is Pembroke, the real estate arm of the family that owns the Fidelity financial services empire. The company is undertaking a 168K SF refurbishment of 25 Cannon Street in the City, and in May 2019 leased the entirety of the scheme to investment adviser Brewin Dolphin.
Singaporean property company Frasers bought Central House in Whitechapel, east London, from London Metropolitan University for £50M in 2016. It originally planned a mixed-use tower including a hotel, but that was scaled back to an office-only refurbishment and extension, which will see six floors added and the building essentially double in size. So far the 157K SF scheme is yet to find a tenant.
One Crown Place
One Crown Place is one of the most fascinating buildings being built in London right now. It is truly mixed-use, comprising 140K SF of office space, a 41-room boutique hotel and 246 apartments, right in the heart of the City, just behind Broadgate, about as far from a typical residential location as is imaginable. Malaysian developer MTD said in 2016 that 60% of the residential units were pre-sold, but Deloitte’s data showed the office element to be unleased, with completion scheduled in the first quarter of this year.
Hong Kong developer Nan Fung and its UK division, Endurance Land, are scheduled to complete the refurbishment of the 115K SF 16 Old Bailey office scheme on the western edge of the City in the first quarter of this year. The scheme has been fully pre-let, with IPG Mediabrands taking 93K SF and flexible office provider Knotel taking the remainder.