The City’s Cheesegrater skyscraper is finally full, its developers have declared, giving a major boost to a commercial property market wobbling in the wake of the Brexit vote.
The companies behind the 225 metres-tall tower in the heart of the Square Mile’s insurance district, British Land and Oxford Properties, have struck deals with existing tenants Kames Capital, Rothesay Life and Amlin to take last three floors of the building.
UK Property Market
Two of the three leasing deals for the tower, formally known as the Leadenhall Building, have been completed since the referendum. Kames is understood to be paying a record City rent of more than £100 a square foot for the 43rd floor.
The Cheesegrater and its rival Walkie-Talkie were the first two tower developments to rise out of the ashes of the financial crisis in London. British Land’s head of offices Tim Roberts said the deals represented a “significant milestone”, adding: “To receive commitments from occupiers so soon after the EU referendum is not only a tremendous endorsement of the building, it underlines the enduring appeal of London.”
Although the UK’s status outside the EU is uncertain, leasing agents say that a shortage of office supply is still giving landlords the advantage for the moment.
One asked: “What can the occupiers do?” But other sources say tenants are now looking for much more flexibility from landlords, including three-year break clauses to reassess space needs when EU negotiations are completed, while the more expensive West End market could be worse hit.
Industry sources say the post-Brexit turmoil has had more impact on the buying and selling of buildings in London with hundreds of millions in sales, including the Cannon Place headquarters of the CBI, pulled.
One investment agent said: “London is still a world city but the investment market is having a proper wobble. We think around a third of the deals are dead, a third in intensive care, and a third continuing.
“But the money from the Middle East and Asian region is not going away. If you have a 7%-10% fall in prices and a 10% fall in the value of the pound, it’s 20% off — buy five, get one free.”
US bank Wells Fargo is expected to spend £200 million on a new City headquarters shortly in another shot in the arm for the capital.
And Sweden’s richest man, H&M chairman Stefan Persson, spent £400 million on Debenhams’ Oxford Street flagship last week.