The Office Gossip

Will L & G's tenants go green?

2010-07-28T09:45:02Z

Legal & General, who owns many London office assets, has launched an 'Office Occupiers Guide to Sustainability', in order to arm its office tenants with the necessary understanding of the environmental impact of property, and a toolkit to implement change.

The guide represents just one of many substantial commitments to the green agenda that the company has made over the past year and for which it has been receiving growing recognition. This commitment was recognised last month when it received two Gold awards at the Mayor of London's Green Awards 2010, in conjunction with the Better Buildings Partnership ("BBP"). These were the Building Improver Award, for its work at 99 Gresham Street, and the Green Portfolio Award.

As one of the largest UK institutional property fund managers, with over £8.7bn of property assets under management, LGP is very serious about its role in minimising the impact of the built environment and setting an example of best practice for other property owners and managers. Yet what will the tenant's think and can the policy actually be realistically implemented?

One New Change's police force

2010-07-27T14:44:00Z

The Financial Times has reported that companies choosing to occupy the office and retail scheme, One New Change, could be asked to pay for the area's own dedicated police force. A year-long trial of the initiative elsewhere in London showed that many tenants are happy to pay for tighter security. Provided by the City of London police, it is hoped that the five-strong unit will offer additional protection against a number of risks, including terrorism.

With hopes that the development (set to open this Autumn) will become the next hot shopping destination, the move could be welcomed by retailers and office occupants alike. Not everyone will be happy about this development though; security companies could lose big contracts to the public sector, as the police force thinks of more innovative ways to raise revenue in these times of public sector spending cuts.

For the full story, see here.

Heron Quays West gets go-ahead

2010-07-22T10:42:00Z

Canary Wharf Group will be celebrating this week, as the saga of its Heron Quays West development finally draws to a close. The developer has been working on this scheme since 2001 to build three more office towers in Docklands.

Michael Hunt and Michael Gross, owners of two buildings located on the site, turned down offers of £5m each for their land and raised their objections when Tower Hamlets ordered them to proceed with the sales. Now, after taking the council to a public inquiry in 2009, they have finally dropped their opposition.

It is not yet known when building works will commence but The Docklands newspaper reports that Goldman Sachs, Deutsche Bank and UBS have been mentioned as prospective occupiers.

Goldman Sachs profits tumble

2010-07-21T08:31:03Z

Trouble may be looming for investment bank Goldman Sacks as the Financial Times reports the banks' quarterly profits plunged 83% in the second quarter to $453m. Equity trading suffered even more, falling 89% to $235m.

The Goldman's chief executive Lloyd Blankfein, said "the market environment became more difficult during the second quarter and, as a result, client activity across our businesses declined".

The bank also set aside more than $1bn for the UK bonus tax and penalties it agreed to pay last week to settle with the Securities and Exchange Commission. To offset the lower profits and expenditures, will we see any of its office space, within its six London office buildings, come onto the market in the next few months? We will wait and see.

JP Morgan's doubts continue

2010-07-19T14:14:42Z

Further to my blog on 6th July, JP Morgan's Riverside South scheme looks in danger of being scrapped once again after reports that the bank is concerned about London's future as one of the world's top financial cities. Austerity measures and crippling regulations haven't done much to persuade the bank to remain in the UK and it now appears that the direction of the business could change altogether. According to the Telegraph, JP Morgan sees its future in Asia rather than London and offices in Bournemouth and Glasgow could also face the axe. The bank has raised its concerns with Boris Johnson and is even understood to have warned Alistair Darling in a phone call last year.

If JP Morgan does decide to pull out of the scheme, Canary Wharf Group will be entitled to payment for works completed so far, as well as a contractual break fee of £76m. CWG is not willing to build the project speculatively so if JP Morgan pulls out, the site is likely to remain vacant for some time. According to City AM, the approximate deadline for a decision is the end of the year.

For more on the story, see City AM and the Telegraph.

Banking and Biscuits (for your dog)

2010-07-15T08:48:26Z

Back in February 2009, we were informed of a letting to a company called Metro Bank. It took the entire 21,000 sq ft first floor of 1 Southampton Row, WC1, on a sixteen-year lease and was reported to be paying £60 per sq ft.

For months we wondered, "Where is this bank from?" and more importantly, "Who opens a new bank in the middle of a recession?" But over a year on, following a lengthy approval process with the Financial Services Authority and a refurbishment of over £2m, this British investment-backed bank is set to open the doors to its first branch on 29th July. Metro Bank hopes to bring some unique touches to the process of banking; sparkly customer toilets, free coin-counting machines and exactly what everyone needs when banking, biscuits for your dog. The branch will be open from 8am until 8pm and also at weekends and it's said that cashiers will not sit behind security screens.

Three more stores are planned for Earl's Court, Borehamwood and Fulham Broadway but the bank will have some way to go if it is to attract new customers. It is certainly not easy to switch to a different bank, but the bank's chairman Anthony Thomson told the BBC, "Consumers don't need convincing. There's a huge pent-up demand for better service. Banking has been a cosy oligolpoly for too long. People will vote with their feet." However, reports that interest rates will not be as competitive may outweigh the customer-focused approach that the bank will take.

June disappointing for commercial development

2010-07-12T11:01:36Z

A report produced by Savills explained that June saw the lowest level of UK commercial development in nearly a year. With continuing fears of a double-dip recession and large cuts in public sector spending, it is likely that the development sector will remain subdued for some time to come.

In terms of central London commercial property, we are experiencing some activity and developer's confidence seems to be growing. With reports that the Heron Tower is close to securing its first pre-let to law firm McDermott Will & Emery and the London Bridge Quarter consortium's deal with TfL to push for a higher rent, it looks like the situation in London isn't so bad.

But can this continue?

As schemes such as Central St Giles face completion without any tenants, occupiers are going to have much more choice. The possibility of the development pipeline drying up seems ever more real, which will mean severe stock shortage in the years to come.

For more on Savills report, see here.

Carlyle Group to purchase a piece of White Tower

2010-07-09T09:42:11Z

The Carlyle Group confirmed yesterday that contracts have been exchanged to purchase part of Simon Halabi's former White Tower portfolio. Comprising five central London properties and one in Chiswick, Carlyle will acquire the portfolio for £671m.

The properties are let to tenants including JP Morgan Chase, IBM and UBS and generate over £62m per annum in rent. Carlyle European Real Estate was launched back in June 2008 and takes a long-term approach to investment, concentrating on European centres and landmark assets.

The portfolio comprises the following properties:

BSI Tower, Chiswick High Road, W4

60 Victoria Embankment, EC4

Ludgate House, 245 Blackfriars Road, SE1

Sampson House, 64 Hopton Street, SE1

Millennium Bridge House, 1 High Timber Street, EC4

Alban Gate, 125 London Wall, EC2

CB Richard Ellis is advising on the sale of other White Tower assets.

JP Morgan's HQ in question

2010-07-06T13:46:31Z

Whilst out site visiting in Docklands, we thought it best to check out what was happening with Riverside South, JP Morgan's long-awaited HQ-to-be... or, by the looks of it, not-to-be.

Although JP Morgan agreed to move here at the end of 2008, there have been numerous rumours that it could move to the City instead and that the scheme could be scrapped altogether.

Of course, nobody knows for sure but if our last visit is anything to go by, things aren't looking too good. Construction seems to have come to a standstill in recent months. Perhaps following the huge bail-outs with tax payers money, now just isn't the right time to spend $3bn on a brand-spanking new building. We'll keep you posted...

Will the England match affect productivity in London?

2010-06-23T09:51:02Z

With England's key match due to kick-off at 3pm today will London office workers be flocking to the local pub? The answer is probably yes, at least for employees of large firms such as HSBC who are offering flexible working options. Docklands24 say bars are expected to be packed from lunchtime onwards for the first England World Cup 2010 game to be shown during office hours.

Unions have urged companies across London to let staff have the time off, although business leaders have warned many smaller firms simply cannot afford a drop in productivity.

A survey of London employers has shown that the majority (62 per cent) will not be making any special provisions to allow staff to watch the game.

Of those employers that said they will let staff watch the match, 13 per cent said they would screen it at work, 12 per cent said they would allow people to leave the office, and a further 12 per cent indicated employees would be able to watch on their computer.

25 Churchill Place

2010-06-22T13:34:21Z

The saga of 25 Churchill Place, E14, took another turn last week as planning permission was granted for the construction of a 19 storey building, providing around 56,935 net sq m (612,848 net sq ft). This may not seem like anything out of the ordinary, but the site already has permission for two other buildings - one of 15 storeys and the other of 23. Any of the three proposed buildings could be built and it would seem that the latest design is a compromise between the two previous permissions.

Original 1990's permission

2008 permission

2010 permission

Two prospective tenants have previously been linked to the scheme. Aon placed the building under offer back in 2006 but decided to remain in the City. Then, in 2008, News International opted not to prelet the building. Jones Lang LaSalle and CB Richard Ellis have been retained as letting agents, although the space is currently not being actively marketed.

According to the most recent planning app, the building will look like this when completed:

Activity in Docklands has been picking up over recent months so perhaps it will be third time lucky for developer Canary Wharf Group and it will secure a pre-let soon.

For more information on the planning application, see Tower Hamlets's online planning register or here for the Design & Access statement.

Shard waves goodbye to pre-let

2010-06-16T15:31:34Z

As you may have heard by now, the big news this week is that Transport for London will no longer be moving into the Shard.

TfL took around 240,000 sq ft on a 25-year lease back in August 2006 and would have paid £39 per sq ft. But now The London Bridge Quarter, a joint venture between the State of Qatar and Sellar Property Group, has bought the lease back in a multi-million pound deal. It is thought that positioning the development at the top end of the market will enable LBQ to achieve a much higher rent.

As for TfL... the company says that it will continue to occupy its current portfolio and will review its options. As part of the deal, Sellar Property is helping it to find a replacement office, into which it might consolidate its numerous small offices across London. However, it seems as though relocation plans have been put on hold, with savings of around £160m planned.

Any suggestions on who will move here next?

Investments in a nutshell

2010-06-11T15:00:31Z

This week has seen a flurry of investment activity and so I thought it best to summarise some of the latest events...

Let's begin with the withdrawals. Perhaps most significantly, Warburg-Henderson decided this week to withdraw 3 Bunhill Row, EC1 from the market following fluctuations in currencies. With so much uncertainty surrounding the Eurozone and its currency, this is hardly surprising. Elsewhere, Shieldpoint withdrew City property 12 Arthur Street, EC4 after receiving offers below the £70m asking price. A private investor also decided to withdraw 21 Lombard Street, EC3, despite the fact that the building had been placed under offer by private equity firm Orion Capital Partners for around £103m. HDG Mansur Investment Services has also changed it plan to sell 169 Union Street, SE1, after agreeing a further 17-year lease with the London Fire & Emergency Planning Authority.

But some vendors have been more successful. Helical Bar announced today that is has completed the acquisition of two neighbouring properties; 1 Mitre Square and International House, 26-28 Creechurch Lane, both EC3. With planning permission already granted for around 400,000 sq ft of offices to be built here, Helical Bar must be feeling very pleased indeed. Interestingly, the freehold for 1 Mitre Square will be transferred to the City of London and HB will be the long leaseholder for the entire site. Elsewhere, it seems that the Greeks still have some cash to splash after another City property, 5 Laurence Pountney Hill, EC4, was sold a private Greek investor for more than £90m. Aviva Investors is also said to have purchased the FA's former HQ, 23-25 Soho Square, W1, for around £39m.

And it looks as though there's much more to come in the way of investment sales, with several properties going under offer this week. Great Portland Estates is said to be under offer to purchase 35 Portman Square, W1, in an off-market deal with Warnford Investments. GPE must be keen to add this to its portfolio after a failed attempt to purchase it back in 2007. MGPA is reportedly under offer to purchase Exchange Towers 1 & 2, E14 for close to the £145m asking price. Vendor Hammerson has been in talks with a number of parties, such as Resolution and Catalyst, despite only putting them up for sale three months ago. And Simon Halabi's old White Tower portfolio is close to being sold, after global investment firm Carlyle Group was selected by CB Richard Ellis Loan Servicing as the preferred bidder. The five properties are Alban Gate, EC2, 60 Victoria Embankment, EC4, Ludgate House and Sampson House, both SE1 and BSI Tower, W4.

Poor Drapers Gardens, EC2 may be feeling rejected after Deka pulled out of purchasing the property as part of its plan to withdraw from around £400m of investment deals. The scheme shouldn't be too downhearted though, as EG hears that Aerium and Lumina Real Estate are just two parties thought to be waiting in the wings.

If you're feeling left out and want to bag yourself an investment too, look no further than 120 Fleet Street, EC4 - on the market for a mere £300m. A group of private Irish investors plans to sell this building, which is let to Goldman Sachs for a further 15 years and is subject to an imminent rent review.

So there you have it, London property investment in a nutshell.

SW8, 9 & 11

2010-06-03T15:53:11Z

Yesterday, we visited the next stop on our magical mystery tour of London's outer postcodes; SW8, SW9 and SW11. As hard as it was to spend a day in the glorious sunshine, we visited more than 130 sites to capture the most current data.

I'll blog again when the area is up and running on EGi but for now, here are some pictures of our visit:

Battersea Studios

Battersea Reach

Falcon Wharf

Mandeville Courtyard

St George's Wharf

MI6 HQ. Unfortunatley, access was denied at this building. We're good, but we're not that good!

Three monsters destroy City view

2010-05-27T10:31:19Z

During the course of last weekend's heatwave I visited Primrose Hill, along with half of London, to check out the fabulous City views. However, I was sorely disappointed when half the view of the City was missing due to three monstrous buildings with red, yellow and blue tops.. classy. I assume these buildings are residential but how they got past planning I don't know, anyone know what they are.....

On a positive note, there were plenty of cranes up in the skies, signalling the race back to the construction site as demand returns.