No Slowdown Yet: The 10 Largest London Leasing Deals Since Brexit
The London leasing market just keeps defying the dire post-Brexit prognosis.
Landsec this week agreed to one of the largest pre-leasing deals in London history — Deutsche Bank will pre-lease a minimum of 469K SF of its 564K SF 21 Moorfields office development scheme.
It is a commitment from Deutsche to maintain a huge presence in London for the next quarter of a century — it has taken a 25-year lease. Deutsche is one of multiple banks that will move a significant number of staff from London as a result of Brexit, but the deal highlights how financial services firms will still retain a huge presence in London and continue to take down space.
The Central London leasing market saw a 23% uplift in take up in the first half of 2017, compared to the same period in 2016, according to Savills. London’s vacancy rate of 4.8% is below the long-term average of 5.8%, and a third of London’s development pipeline between now and 2020 is already leased.
These are the companies and schemes driving that post-Brexit resilience, in the form of the 10 largest London office leasing deals (other than Deutsche Bank) since the E.U. referendum in June last year. They highlight the broad range of companies and sectors still taking significant amounts of space in London.
1. The U.K. Government
As part of its drive to rationalise the amount of property occupied by the Civil Service, the U.K. government subleased 536K SF from Barclays in its office at 10 South Colonnade in Canary Wharf in November on a 15-year lease. The deal will move 5,700 civil servants into the building by the end of 2018.
In September last year Apple gave a major boost to the Battersea Power Station redevelopment when it agreed to lease 500K SF of office space. It will be the firm’s U.K. HQ, and shows how companies are willing to commit to innovative buildings in new locations — Battersea is very much not a traditional office location.
3. Freshfields Bruckhaus Derringer
Law firm Freshfields agreed to take 288K SF at Brookfield’s 1M SF 100 Bishopsgate scheme in February. More important in the context of Brexit is the scheme itself — less than a month after Brexit, Brookfield secured a £500M construction loan from a club of banks willing to finance a tower that at that point was 75% unlet.
4. WeWork, Part 1
A major part of the resilience of the Central London leasing market has been the rise of co-working and serviced offices, which were the biggest taker of space in the first half of 2017. No one epitomises that better than WeWork, the U.S. co-working group that is the largest in the world, founded by Miguel McKelvey and Adam Neumann. In June this year it agreed to pre-lease 284K SF at Almacantar’s Two Southbank Place near Waterloo station.
5. Wells Fargo
Coming less than a month after Brexit, Wells Fargo’s decision to commit to a new London HQ was seen as a huge early positive for post-Brexit London. The fact that it agreed to buy the 228K SF building it will occupy at 33 Central in the City of London from HB Reavis for £300M only added to this.
6. The Financial Times
The FT agreed to move back to its original home at Bracken House in the City after nearly 30 years in Southwark. It leased the 187K SF building from Japanese developer Obayashi.
7. WeWork, Part 2
When you see that WeWork has undertaken two of the 10 largest leasing deals since Brexit, you start to believe the company’s head of European real estate, Patrick Nelson, who told EG in an interview this week: “We’re only at the beginning in London.”
In June it took 140K SF at 125 Shaftesbury Ave. in the West End, also from Almacantar.
Expedia is another tech firm putting a big vote of confidence in London. In March it agreed to double the size of its space at Derwent London’s Angel Building on the edge of the City. It took 137K SF with the option to expand to up to 160K SF, and further space requirements are likely.
It is not only technology firms looking to expand in London. Engineering and services firm Arup pre-leased 134K SF of Derwent London’s 80 Charlotte St. in Fitzrovia in March, allowing the company to commence the 380K SF development.
It is not an expansion, but Nex, the new name of broking firm ICAP, took a 116K SF chunk at Exemplar’s Fruit & Wool Exchange development on the Edge of the City in April. Now British Land has to work out what to do with the 375K SF building at Broadgate which Nex is leaving.