BLACKROCK, the investment management group in which Barclays owns nearly 20 per cent, yesterday beat off Macquarie Bank to land a 25 year deal to base its London operations at Drapers Gardens in the City of London.
The deal, which will see Blackrock paying £49 per square foot with a three year rent-free period, was being heralded by property specialists as further sign of a strengthening of City rents.
“This is a major deal for the City leasing market, proving that it is on an upward curve. With the landmark Clyde & Co deal at St Botolphs in December at a similar rent (£48per square foot), rents are up and the number of smaller new spaces available has also diminished. Maybe a 19 per cent increase in top normal City rents during 2010 will be pessimistic?” said Chris Vydra, partner at Knight Frank, City Leasing
Blackrock, which will house all its London operations in the building – comprising around 2,000 people – is renting the space from Canary Wharf Group, which is the main operating subsidiary of Songbird Estates, and Exemplar Developments.
Blackrock recently merged its London operations with Barclays’ BGI Investors and the two operations are currently housed seperately at London Bridge and Royal Mint Court. The two businesses will bring roughly 1,000 people each to the new building.
There were suggestions yesterday that Macquarie, which is said to have offered £43 a square foot, wanted to come back with a higher offer but was unable to do so before the deal with Blackrock was clinched.
The Drapers deal will raise expectations for the kind of rent Minerva might be able to receive at its new development near Bank station, Walbrook.
As well as rents rising, there are signs of rent free periods falling, analysts said.