EG LONDON THE CITY


the upturn, but with the customary caution. Andrew James, managing director for recruitment consultant Michael Page, says: “There is more recruiting going in all sectors. From where we are sitting business has definitely picked up, although in the City you do still have the issue of massive supply over demand.” Neil Prime, head of offices for Jones


rent in the high £40s per sq ft. It is not surprising that this deal is


among activity that has cheered up Hines director Mark Swetman. His analysis is that two years ago the


market was hit by the double whammy of economic downturn and a surge in space released by tenants such as JP Morgan, which moved to Canary Wharf, releasing more than 1m sq ft in space.


End to the western side of the City.” So far this year, these include Amazon,


which has taken 210,000 sq ft at Sixty London on Holborn Viaduct; oil company Genesis, which moved from St James to St Paul’s Churchyard, EC4; and public relations firm FTI, which took 70,000 sq ft at 200 Aldersgate, EC1, at a rent understood to be around £45 per sq ft. This building is now 84% let and


“The fact is that the western side of the City is now an acceptable alternative to the West End”


Lang LaSalle, admits that it has been “a tough 24 months”, especially for some of the big towers and big office developments that have failed to let as quickly as their developers would have hoped, but he too agrees that there is change in the air. Law firm CMS Cameron McKenna is


understood to have taken 150,000 sq ft at Hines’ Cannon Place, EC4. The 394,000 sq ft building has been empty since completing in 2011. That deal is believed to be for a lease of more than 20 years, with four years rent-free, at a


The tenant-release space was


unexpected and has taken time to be absorbed, he adds. But things are different now and Swetman expects the City to see between 1m and 1.5m sq ft of deals in the next two years. The city’s staple occupiers – financial


services and lawyers – have had it tough during the recession, cutting back requirements and offloading excess space. In Q1 this year not a single financial services deal made it into the top 10 deals. The insurance sector – another staple


– has faired a little better (see feature, p26) but it is a new wave of occupiers that are causing the most excitement, occupiers previously associated with the West End rather than the city. Philip Pearce, head of Savills City leasing


and development team, says: “There is a definite drift of tenants from the West


ADAPTING TO SUIT CHANGING OCCUPIERS


One of the consequences of how tough it has been for the office buildings with big floorplates to let is that smaller ones have become correspondingly more fashionable. Quadrant Estates has three


developments under construction in the city that have what associate director Toby Pentecost calls “adaptable” space. Its 100 Cheapside development, for instance, spreads its 85,000 sq ft of office space over nine floors. The adaptability this offers, says


Pentecost, is exactly suited to the changing tenant profile of the City: “A single floor in a building like Cannon Place, is 50,000 sq ft, which is more than an acre, used to suit the big finance companies. But because the City is changing, that is not so true any more.” Of course, most of the big buildings


are willing to adapt their large floorplates in order to secure tenants, but understanding how such conversions will take place can be a problem in itself. Pentecost’s fellow director Graham


Tyler says: “It does need a leap of imagination for potential tenants to visualise how a large floorplate can be converted.”


24 www.estatesgazette.com 8 June 2013


Helical Bar is on the brink of approaching investors that might want to buy it. CBRE and Savills have been jointly instructed for the sale. FTI had wanted space in Sixty London


before Amazon jumped in and leased the entire building – a tentative sign of competition for space returning, perhaps? Amazon is thought to be still on the


hunt for another office of similar size in the City. Smaller deals seem to be on the rise,


too. At 200 Aldersgate, for example, Helical Bar has enjoyed a steady flow of lettings including Agence France Presse, K Line UK, the Association of Train Operating Companies and Cass Business School. Taken together, these lettings add up to 73,000 sq ft Pearce says: “The fact is that the


western side of the City – particularly the area around St Paul’s – is now an acceptable alternative to the West End. It’s low rise and it’s accessible. But these sort of tenants will not go much beyond St Paul’s.” Effectively, argues Pearce, the tenants


that would formerly have gone for the West End have displaced the old financial, fund management and legal tenants further eastward. Alongside this new type of City tenant,


more traditional financial services companies have also been doing deals further eastward in the City in some of the flagship developments. These include Gerald Ronson’s Heron Tower, which is now almost 60% let. Elsewhere, Worldpay and Vanguard


are close to taking a combined 127,550 sq ft at the Walbrook Building, EC4. Credit card processing company Worldpay is taking 93,000 sq ft on the fifth and sixth floor, while fund manager Vanguard is under offer for 34,551 sq ft lower down the buildings. And rents? Prospects there are good,


according to research from CBRE. The firm predicts that average City rents of £55 per sq ft could rise by 20% to £66 per sq ft by 2017.


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