These 8 Companies Need Big Chunks Of Space In London — And Might Not Find It
London’s office market has thus far casually shrugged off any impact from Brexit, with annual take-up at or above long-term averages in the three years since the vote.
That has caused an unexpected problem for big office occupiers. According to Deloitte, current office construction is at a three-year high, but more than half of that space is already leased, a figure that rises to almost 80% for the bigger schemes that large companies might expect to occupy.
Big occupiers are looking for about 5M SF of office space in London, according to JLL. The eight companies below are all looking for more than 150K SF, according to data in a report from Green Street Advisors, which cites CBRE and Derwent London and its own research for the information. The market is not getting any easier for these tenants.
U.S. bank BNY Mellon is one of three firms with a requirement for more than 200K SF. It is looking for around 300K SF to consolidate staff from two offices, at 160 Queen Victoria St. in the City and One Canada Square in Canary Wharf. In December it put its search on hold and entered talks about whether to extend its lease in the City, which runs to 2023, but there has been no announcement about a resolution with landlord Blackstone.
The UK telecoms company is in talks to sell its 273K SF HQ near St Paul’s Cathedral to Great Portland Estates for about £200M, as part of its search for a new home of around the same size. CoStar reports it has picked Aldgate Developments’ 325K SF One Braham scheme in the east of the City as a preferred location. It could take the whole of what is the largest speculative development in London not to have found a tenant this cycle. Also on its radar are 80 Fenchurch St. and the International Quarter in Stratford.
Latham & Watkins
According to Green Street’s report, law firm Latham & Watkins is looking for more than 150K SF in London. It occupies around 130K SF at 99 Bishopsgate in the City, which is owned by Brookfield, China Life and the Qatar Investment Authority. The firm’s lease runs until 2021.
It is already the biggest private sector occupier in London, where it occupies about 3M SF — but it isn't done yet. WeWork has ambitions to almost double that footprint over the next two years. It will remain the leasing agent’s best friend, in spite of increasing concern from lenders about whether to provide debt to buildings with a major WeWork presence. According to Estates Gazette, it is currently in talks to take all 350K SF of Goldman Sachs’ former HQ on Fleet Street, in what would be its largest single global lease.
Broker JLL is looking to consolidate its West End, City and Docklands offices into one 180K SF hub, with a lease expiry on its 72K SF Warwick Street office just off Oxford Street the most pressing issue. But it doesn’t seem to be in too much of a hurry — the search was launched in 2017.
In October, computing giant IBM appointed BNP Paribas Real Estate to assess its central London office options. It occupies a 217K SF office on the Southbank, and is weighing whether to refurbish the building, which is owned by a Saudi investor, or find another office of 150K to 200K SF.
Retailer Kingfisher launched a search for 300K SF of London office space in 2016. That search has been pared back since then, but it is still looking for more than 150K SF, which would likely consolidate existing space in London and also possibly its current Southampton HQ. It occupies about 75K SF in London at Sheldon Square in Paddington as well as in British Land’s flexible office concept Storey in Broadgate.
Green Street also points to a slightly more under-the-radar company looking for a significant office move. Mastercard is flagged as a company looking for more than 150K SF. It occupies around 40K SF at 10 Upper Bank St. in Canary Wharf, and only moved there in 2013.