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Recent reports have indicated that the tenant of Chinese-owned Lloyd’s building may be considering a move away from the iconic skyscraper.
Lloyd’s of London is reputed to be tempted by a move to a proposed building for which planning permission was granted earlier this year. The plans show a skyscraper already likened to a ‘Gotham City’ tower and is the brainchild of TIAA Henderson Real Estate.
Lloyd’s has been the occupier of its current location for almost thirty years and has the option to vacate in 2021 according to the terms of its lease. However, it is indicated by property experts that the very reasons Lloyds is considering a move away from the site are those that may keep prospective tenants at bay as well. The owner, a Chinese insurer who only purchased the building last year, for £260 million, could be faced with trying to let a purpose-built building at a time when brand-new purpose-built offices are much more fit for purpose.
Despite its landmark status, it is reported that Lloyds is looking to escape the expensive running costs of the landmark building, which may deter other occupiers. The rent is £17 million a year, but the service charge costs are said to be double those of many other London office buildings. The issue is compounded by the fact that the building is Grade I listed, which makes changes to it very difficult in legal terms – and no less in practical terms as far as the layout is concerned. Yet, with the approaching option to exit the lease in just a few years, the owner must have been aware of the risks involved when it purchased the building last year.
However, a move for the insurer is not necessarily an easy solution if it wants to be close to other players in the market. The proposed ‘Gotham’ building might indeed be that solution.
This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.