Multinationals in battle for quality London office space

Published 20th Jan 2010

Google, Royal Dutch Shell and Macquarie are engaged in a fierce battle for high-quality office space in London because of a shortage of new developments.

Debenhams, Aegis, and Bloomberg are other companies scouring the city for new headquarters. They are faced with limited options and the prospect of missing out on their first choice because cash-strapped developers pulled the plug on new developments in light of the financial crisis.

Large and high-quality space is attracting increasing competition, which escalated over Christmas when BlackRock, the fund manager, gazumped Australia's Macquarie to occupy one of City's largest developments, the 270,000 sq ft Drapers Gardens, which is owned by Canary Wharf Group and Exemplar Properties. Sources say BlackRock's overall bid was 30pc ahead of Macquarie's agreement with the landlords.

"There is a feeling among tenants that if they don't sign soon they will miss out," a leading London agent said. "There is a positive sentiment among landlords."

In a further sign that the balance of power in London is shifting towards landlords, Delancey, which is run by Sir John Ritblat's son Jamie, is understood to have successfully pressed the tenants at a building it is acquiring from Royal Bank of Scotland, 40 Holborn Viaduct, to renegotiate their rental deals. According to sources, Gaz de France and consultancy Capgemini have had to reduce – in favour of the landlord – a cap on upwards rent-reviews and rent-free periods.

The situation is in stark contrast to six months ago, when landlords had to accept multi-year rent-free deals in order to secure tenants.

Source: ' Telegraph '

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