1992 held some pleasant surprises for the UK office market: Sony signed on the dotted line at Brooklands, MEPC almost filled Alban Gate and Ross Perot popped up in West Drayton. But, as Duncan Lamb recalls, it was far from plain sailing.
Jan
Looking to the year ahead, Robin Tassell of NCC says: “We’re going to have to stop looking over our shoulders at the past and be open-minded enough to learn from other industries and other professionals. If we don’t, we’ll suffer for it – and the greatest suffering will be seen in London.”
JP Morgan’s 63,000-sq ft letting to Frere Cholmeley at 4 John Carpenter Street, EC4, reportedly includes three years rent-free. The tenant’s agent, Sinclair Goldsmith, declines to comment on the rumour that the space is “zoned” owing to its depth, to arrive at an overall rent of £25-plus per sq ft.
Feb
George Simco of advertising agency D’Arcy Massius Benton & Bowles confirms that, as part of his company’s proposed move to Canary Wharf, Olympia & York will take on DMBB’s existing liabilities at 199 Knightsbridge and 2 St James’s Square. The tenant reputedly turned down 100,000 sq ft in the Square Mile at £32 per sq ft. No rent-free space was included in the deal, but it did have a £10m reverse premium.
Simco says that the Canary Wharf financial arrangements are “very attractive”. Speaking at the British Council for Offices dinner, former environment minister Lord Jenkin warns: “The 1990s will be an era when the customer is king and nowhere is that going to be truer than in the provision of office accommodation.”
St Quintin says that the challenge of Frankfurt and Paris to London’s position as the financial capital of Europe are “probably exaggerated”.
The Government’s new Child Support Agency takes 87,000 sq ft at the 500,000-sq ft Waterfront complex at Merry Hill near Dudley. It gets three months rent-free and is paying £11 per sq ft on a 25-year lease. As part of the deal, Richardson Developments agrees to connect the two buildings involved with a bridge.
Westminster council accepts a code of practice for estate agents’ boards in W1 conservation areas. The code – drawn up with the Office Agents Society and the Shop Agents Society – permits agents to use boards of a restricted size and type in areas where boards had previously been banned.
Herring Baker Harris gets to grips with analysing the different types of space available in the City of London rather than just the aggregate figures: “The need for a segmentation approach to the market is now essential as tenants faced with a broad range of options become more selective.”
Mar
The Brunel Centre, a consortium of British Land, Dutch NMB Postbank Groep NV and Summit Group, formulates a “multi-million-pound”compensation claim against the London Docklands Development Corporation for damages and loss over the developer’s Cityharbour scheme.
Land Securities mothballs the 200,000-sq ft redevelopment of Eland House, Stag Place, SW1, for an indefinite period.
In 1991, the level of demand for new Dublin office space reached its highest level for 10 years, reports Hamilton Osborne King.
Apr
Trafalgar House pulls off the biggestever office letting to a Japanese tenant: Sony (UK) signs up for the 140,000-sq ft (net) HQ building at Brooklands Business Park.
In the light of the Conservative Party’s election manifesto, the Confederation of British Industry predicts that the law relating to privity of contract will be amended within a year.
May
In the wake of April’s terrrorist bombing, a further 75,800 sq ft of short-term City lettings are secured.
Rental growth in the Scottish office sector is unlikely until late 1993, says Ryden.
British Land advises North West Thames Regional Health Authority on the redevelopment of a 4.6-acre site at Westminster Hospital, SW1.
KFR’s M25 report says that as much as a quarter of the 3m sq ft due for completion in 1993 is prelet. “This is extraordinarily high. The advance take-up is normally around 15%,” says KFR’s Stephen Mallen.
At the first British Council for Offices conference, the Prudential’s Hugh Jenkins defends the 25-year lease. He tells his audience to “let the rent take the strain” and warns against the perils of tampering with property’s “existing terms of trade”. In contrast, Andrew Buxton of Barclays Bank says that devotion to the 25-year lease is a “classic case of an industry satisfying its own needs before that of the customer”.
Jun
Central London now has 32.4m sq ft of office space available – 18% of the total stock. Debenham Tewson & Chinnocks estimates that the supply will plateau at 34m sq ft.
“Banana Wharf?” (EG Opinion, June 6): “Prior to the recent election, the stumbling administration of John Major looked increasingly accident-prone: Canary Wharf is potentially his first banana skin”.
Texan businessman Ross Perot takes 8,400 sq ft at Orbit Developments’ Heathrow Boulevard in West Drayton, Middlesex. While spending millions of dollars on his presidential campaign, Perot can still afford £26.50 per sq ft on a two-year lease with four months rent-free.
Jul
Asked in the House of Commons whether the Government intends to abolish the 50% business rate on “non-productive” empty premises, environment under secretary Robin Squire answered: “No. Empty property benefits from local services and it is right that it should contribute to the cost.”
More than 10m sq ft of office space is under construction in central London, with another 86m sq ft in the planning pipeline.
Grimley JR Eve partner Michael de Vick warns that open-market office rental values may soon to be of “academic interest only and not constitute firm market evidence”.
De Vick claims: “Increasingly, there are questions as to how inducements should be treated – whether they should be reflected over the first five years or over the full term of the lease”.
The Law Society wins its battle to have the rent cut on its 27,400-sq ft Chancery Lane headquarters.
An upward/downward review clause in the lease enables an independent expert to cut the rent by £10 per sq ft – from £690,000pa to £454,000pa.
Eagle Star signs for a 38,000-sq ft office building in Ballsbridge, Dublin, at £16.50 per sq ft.
Aug
The Welsh Development Agency reports a 45% increase in commercial lettings during the first half of 1992 against the same period last year.
Rents in all sectors of the secondary market have slipped during the past 12 months, say Hillier Parker, and are still falling.
Sep
Prudential wins outline consent fora £325m mixed development at Knightsbridge Green, SW7. The plans include 737,000 sq ft of offices.
Looking to the immediate future, Alan White, charged with the running of BT’s 9,000-property portfolio, says: “Any new space which we lease for administration will be for a relatively short term.”
Reflecting on the office development of the last decade, Hillier Parker’s Don Newell comments: “The office industry in the 1980s was easy prey for the pedlars of fashion”.
Chemical Bank rejects a move to Canary Wharf in favour of MEPC’s Alban Gate on London Wall, EC2. The rent is believed to be under £30 per sq ft, but the tenants have a rent holiday of three years.
Arguing the case for more intensive management, FPM’s Lionel Prodgers contends: “Perhaps it is time to be radical and offer fully inclusive rents, with the professional landlord being responsible for the upkeep of the building.”
Research from law firm Richards Butler reveals that 95% of commercial investors have stopped insisting on 25-year leases and that the “clear lease” is increasingly under pressure. More than 60% will now accept 10-year terms and around 30% will go as low as five years if tenants give up their statutory renewal rights.
Oct
Greycoat and London Transport unveil plans for a redevelopment of Victoria bus station and neighbouring buildings on Victoria Street, SW1. Geoffrey Wilson of Greycoat says: “Rents of between £45 and £50 per sq ft are required to make it viable”.
Hillier Parker figures show that UK office rents dropped by 5.4%.
To offload a £3m pa rental obligation at the Campus Business Park in Hemel Hempstead, Crosfield Electronics pays its landlord – Legal & General Property – a reputed £15m to get out of its lease.
Newcastle upon Tyne sees its largest letting for four years as the Employment Services take the 34,000-sq ft New Croft House at a rent of £13.50 per sq ft.
Arcona again reduces the asking rent on 84 South Audley Street, W1. This time it comes down from £58 £38.50 per sq ft. The original price was £70 per sq ft.
The City of London planning committee approves – by 17 votes to one – Paternoster Associates’ redevelopment plans for Paternoster Square, EC4.
Nov
An English Heritage bid to list MEPC’s Centre Point in London’s West End is turned down by the Department of National Heritage.
According to Richard Ellis, prime office values across Europe fell by 5.2% during the third quarter of the year – bringing the decline over the past year to 18.7%.
Part of the Law Commission’s revisions of Part II of the 1954 Landlord & Tenant Act include a proposal that tenants should be able to apply for a rent reduction pending lease renewal “when the market justifies it”.
Environment under-secretary Toby Baldry rejects proposals from the Property Market Reform Group for a rent register: “It would involve changing the law, be resource-intensive, and would not be favoured by those concerned with commercial confidentiality.”
Glaxo’s Stockley Business Park HQ and Standard Life Assurance’s new base at Cannonmills near Edinburgh dominate the Office of the Year competition. One of the judges, Ralf Lorenzen of Du Pont, says of the Standard Life building: “They used a number of new ideas and old ones in new contexts to optimum effect. Another feature favoured by the judges was the wide double-skin perimeter wall which allows the inner windows to be opened for fresh air”.
