British Land’s Broadgate deal is a vote of confidence in the struggling London office market
One of the UK’s largest homeowners has welcomed a major vote of confidence in the London office market by renting out almost a third of the flagship complex.
British Land leased 134,000 sq. Ft in One Broadgate downtown to global real estate agent Jones Lang LaSalle (JLL) for 15 years, which is considered one of the largest deals in the capital this year.
JLL will move to a new office after completion of renovations in 2025.
British Land leased 134,000 sq. Ft in One Broadgate downtown to global real estate agent Jones Lang LaSalle (JLL) for 15 years.
The deal covers almost 30% of the available floor space on three floors.
European investment giant Axa also said it has raised hundreds of millions of pounds to invest in new office space in the UK, France and Germany.
Ian Chappell, head of development and value-added funds at Axa IM Alts, said the plan demonstrates the belief that “offices have a future”.
It’s a big bet that workers in general will return to work in offices at least a few days a week, after many of them have done their full work from home during the pandemic.
According to Bloomberg, British Land is also seeking to bring law firm Allen & Overy to the Broadgate site, which could potentially lease 300,000 sq. M. Feet.
Boss Simon Carter said: “We are delighted that JLL has chosen this fantastic building for its new UK flagship office. This step is a real vote of confidence in London. “
Others seem to agree, according to research by CBRE, which found that new offices were the primary target of over one third of investors and that London was in demand.
David Solomon, head of Goldman Sachs, said that working from home during the pandemic was simply “abnormal” and that the investment bank will call back staff at its buildings as soon as it is safe to do so.
However, rival banks HSBC and Lloyds said they would cut office space after the pandemic recedes, as well as consulting firms such as Grant Thornton and PwC.
And on Wednesday, JP Morgan chief executive Jamie Dimon said the investment bank would need “significantly” less office space in line with plans to introduce more telecommuting.
“For every 100 employees, we may only need 60 places on average,” he added.
Real estate experts say offices are unlikely to be dropped entirely, but now that investment is likely to focus on modern buildings that are pleasant to work in and that meet high environmental standards.
And on top of that, the IWG, a flexible workspace provider, is betting that regional centers will soon be preferred over large cities – workers will simply log in from a downtown building rather than travel to London.