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Bid battle set to hike rents

A&nbsp;BIDDING war has broken out between Australian bank Macquarie and fund manager Blackrock for new City development Drapers Gardens in a move experts predict will hike prices across the City.<br /><br />Both firms are on the hunt for a 250,000 sq ft office to re-house staff. But following a number of stalled construction projects in the downturn and a recent rash of property deals, supply of new space is limited.<br /><br />Blackrock has been looking to move out of its dated 1970s building on King William Street since its takeover of Barclays Global Investors.<br /><br />And Macquarie dipped its toes in the property market last year to sound out any deals, before making a swift retreat just before the downturn.<br /><br />Macquarie was previously looking at the Ropemaker Building and Watermark Place &ndash; which have now been snapped up by Bank of Tokyo Mitsubishi and Nomura respectively.<br /><br />Industry observers said that a battle for Drapers Gardens would drive up rents across the City, in a blow for tenants who have been trying to capitalise on the steep falls in rental values.<br /><br />Sources believe the competition for the office will drive the price up from the current average City rate of &pound;42.50 per sq ft to &pound;45 per sq ft.<br /><br />Knight Frank City partner Bradley Baker said: &ldquo;The interest in City core buildings is increasing and this will inevitably lead to a shortage of prime core space. This will result in shrinking rent-free incentives and undoubtedly rising rents in the long term.&rdquo;