by Helen Pearce
Salomon Brothers, the US investment bank, have finally signed a lease for the majority of Victoria Plaza, developed by Greycoat and Norwich Union in association with British Rail, and have revealed their reasons for the delay.
The tenants, who have taken 158,345 sq ft of the development which spans Victoria Station, SW1, are planning a 55,000-sq ft dealing area in the building. At the heart of this space will be a 13,000-sq ft double-height dealing room and to accommodate this the tenants need to demolish a 9,000-sq ft office block which links the two parts of the building. They will also roof-in the southernmost of the two atria, for which GLC permission was needed, atria being classified as non-usable space. The plan will increase usable office space by some 4,000 sq ft.
A steel structure will support a 13,000-sq ft suspended ceiling over the floor, and will allow the space to be largely column-free.
According to Savills, who acted for the tenants, the base rent for the space is £19.50, though Greycoat maintain it averages over £19.75 per sq ft.
In all there are five leases. On the dealing floor space, after the first three years Salomon Brothers can determine the lease any time during the following three years and can withdraw without penalty. The rest of the space is on conventional leases, and the first rent will be paid mid-year.
Initially, the tenants will not be paying for the 4,000 sq ft of “extra space”. However, Greycoat’s chairman, Geoffrey Wilson, says he and his co-developers will benefit from the extra space under an agreed formula at the first review. The developers are also making a capital contribution towards carpeting and beefing-up services to cope with the needs of the Salomon operation. Salomon Brothers declined to give details of the cost of the alterations.
Charles Sanderson of Savills commented: “Salomon’s decision can only benefit the Victoria market but should be seen in the wider context. It is now accepted in the City market that location is no longer paramount.”
Also commenting on the deal, Charles McVeigh, managing director of Salomon Brothers, said their aim was “to remain totally flexible”. He would not be drawn on whether the dealing floor would return to the City.
The firm will be vacating about two and a half floors of the three they hold at 1 Angel Court, EC2, but will maintain a dining room and meeting suites. They will also leave Moor House, London Wall.
Mr McVeigh said they had initially been looking at space in and around the City, but there none suitable was available in time. Other buildings and developments considered were Canary Wharf, on which Savills are also advising, though this would not have been ready in time; Cotton’s warehouse in London Bridge City; and Broadgate.
Mr McVeigh added that the Bank of England had been “sympathetic” to their move away from the traditional financial heartland, appreciating the shortage of large, quality space.
Though Savills describe the acquisition as “essentially on buyer’s terms”, Greycoat are obviously far from unhappy. The remaining space in the building, one level of around 42,000 sq ft, is to let at £22 per sq ft through agents Jones Lang Wootton and Teacher Marks. The space was being looked at by Dean Witter, but they have now lost interest.
In addition Greycoat are cracking on with the second phase of Victoria Plaza, to be known as 123 Buckingham Palace Road, which has been designed by Arup Associates. A glass-covered square will be flanked by two buildings containing a total of 350,000 sq ft around two eliptical-shaped six-storey atria. The development will feature glass lifts, flying galleries and roof gardens and there will be a colonnaded parade of shops and restaurants.
The offices will be adaptable to occupiers’ requirements, in various packages — each floor is around 30,000 sq ft. The development can also house up to three 20,000-sq ft dealing rooms.
Funding has yet to be sorted out, but potential tenants are already showing interest, say Greycoat. These include US and UK financial and oil organisations, one of which for some time has been rumoured to be Conoco. Letting agents are once again Jones Lang Wootton and Teacher Marks.
