It is not every day Bugs Bunny checks out new offices, but with Warner Brothers’ lease on its UK headquarters at Theobalds House in Bloomsbury, WC1, due to expire in 2014, there is a distinct possibility that the cartoon rabbit may be looking for a new home.
Details of the 100,000 sq ft-plus requirement are still sketchy, but local property professionals believe the subsidiary of US entertainment giant Time Warner is likely to move.
Bugs is treading a path well worn by media-related businesses. Last month, TV production company Shed Media, itself recently acquired by Warner Brothers, consolidated into a single Midtown property. And one of the largest lettings in Midtown in the first quarter of the year was to TV post-production company Prime Focus.
Rhys Evans, partner at West End and Midtown agent Monmouth Dean, says funky fit-outs are a draw: “A lot of occupiers, not just media firms, are looking for non-conventional specs. Many landlords don’t realise that accountants and solicitors can live with something a bit quirkier.”
Canny investors are tapping into the potential demand. One of them is Dorrington, which specialises in turning around secondhand stock across central London. It is transforming 25,000 sq ft at Kingsbourne House on High Holborn, WC1.
Dorrington director Robert Harris says: “We own properties in Clerkenwell and are applying the same principle. You could say we are bringing loft offices to Holborn.”
That may suit smaller businesses, but for larger companies Midtown may be losing its shine, not least because of the limited availability of space. Some corporates are using serviced offices to meet their needs (see box, right), while others, such as Nabarro, are contemplating moving out altogether.
The law firm has been based in 118,000 sq ft at 84 Theobald’s Road, WC1, since 1999, and with the lease expiring in 2014, has tasked CB Richard Ellis with a search for premises of up to 150,000 sq ft.
“Our existing space has served us pretty well. But now we are more to the west than our comparable firms, and that’s our dilemma,” says Deborah Parry, Nabarro’s head of real estate, who is hoping to make a decision later this year.
With the shortlist down to a handful of properties, including the existing offices, Parry is still weighing up the key factors.
“We like the normality of Holborn, the affordable shops and leisure outlets for our staff. Value for money is also important; we don’t want to be seen as too flashy. But we are minded to go City-wards,” she says.
Nabarro may not be alone in moving from Midtown, though others might be going in the opposite direction. Local commentators are speculating that Warner Brothers could head west, to Regent Street.
At your service
Companies looking to dip their toe into serviced office space in central London are increasingly tempted by Midtown’s geographical position, halfway between the West End and the City. This includes serviced office providers themselves.
One of the most recent to open up shop, last September, is Orega, which took on a 10-year management lease of 20,000 sq ft at 16 High Holborn, WC1.
Professional services firms seeking project space were quick to move in. Blue-chip firm Deloitte, based a stone’s throw away on High Holborn, and Accenture, slightly further away in Fenchurch Street, EC3, have signed short-term licences for 150 and 60 workstations respectively.
John Drover, chief executive of Executive Offices Group, which has three centres in Midtown, says that the presence of corporates is beneficial for all. “Large companies attract smaller ones to service them,” he says.
“As Midtown experiences a resurgence of larger traditional occupiers, it will see a renaissance of good-quality supplier firms.”
STS Group is typical of the smaller tenants that are turning to Midtown. The UK subsidiary of a US IT provider started with virtual office space, before recently signing up for a three-workstation (around 250 sq ft) office in EOG’s Hudson House, WC2.
STS European operations director David O’Toole says: “We considered traditional space, but the cost of refurbishment and length of lease were stumbling blocks.”
Media movers
Midtown incomer Shed Media is a familiar logo on Britain’s TV screens. The independent UK production company has made a string of popular shows, including Footballers’ Wives, Waterloo Road, Bad Girls, Supernanny and Who Do You Think You Are?
It was an appealing prospect for Warner Brothers, which bought a controlling stake in the company last October. By then, the firm was already looking to move from the buildings it occupied in King’s Cross, Kentish Town and Camden, north London.
It selected 27,000 sq ft of refurbished space at 85 Gray’s Inn Road, WC1. Tom Wildshaw of Carter Jonas, who advised Shed Media, says: “Being in three properties didn’t really work, and they also had lease expiries coming up, so this was a logical move.”
WB Bidco – formed by Warner Brothers Entertainment and Shed Media – signed a 10-year lease at a rent equating to £27 per sq ft, with more than two years rent-free.
Not far behind Shed Media was post-production outfit Prime Focus. It took a nine-year lease assignment on 18,000 sq ft of refurbished at 2-4 Bucknall Street, WC2. “The company already has several buildings in Soho and needed expansion space. This building fitted the bill perfectly,” says Rhys Evans of Monmouth Dean, who acted for the original leaseholder.
