British Land lets a third of Cheesegrater

BRITISH Land has pre-let a third of its Cheesegrater skyscraper to insurance company Aon, giving it a head-start in the race to secure tenants before a glut of new office space comes to market in 2014.

The US-based insurer is leasing the 10 lower floors in the 47-storey Leadenhall Building, equivalent to 191,000 sq ft out of a total of 610,000 sq ft, and has an option of a further five floors. It will move in when the building is completed in 2014.

Industry sources said that Aon was paying around £55 per sq ft and some suggested British Land and venture partner Oxford Properties had been hoping for a higher rate. British Land’s shares dipped slightly, closing down 2p at 582.5p

But some analysts think predictions of City rents as high as £70 or £80 per sq ft are wide of the mark and said the property developers had done well to sign a tenant at this stage in the building’s development.

John Cahill, an analyst at Evolution Securities, said: “There’s an awful lot of supply coming on to the market at the moment, and I’m not convinced there is huge demand. Some talk of rents around £70 per sq ft but I don’t see it happening.”

BATTLE OF THE BUILDINGS

The Cheesegrater

Developer: British Land and Oxford Properties
Completed: Due 2014
Has done remarkably well to pre-let space to Aon at this stage, although some analysts think it could have got more than £55 per sq ft if it had waited a little longer.

The Shard

Developer: Sellar
Completed: Due May 2012
With around a year to go until completion, the Shard still hasn’t pre-let any office space. But the developers won’t have any trouble drumming up interest in such an iconic building.

Heron Tower

Developer: Heron
Completed: March 2011
Has pre-let around 20 per cent of its office space, with industry sources suggesting it has secured an rate of £55 per sq ft. Will be glad to have completed before Pinnacle and Walkie Talkie.

Walkie Talkie

Developer: Land Securities and Canary Wharf
Completed: Due 2014
Another building that will come to market in 2014, the developers will surely be smarting after losing out on the Aon deal to arch rival British Land.

Pinnacle

Developer: Arab Investments
Completed: Due 2014
Hasn’t found a tenant, which means it has to go back to its investors for extra funds to continue construction. Will face stiff competition from the Cheesegrater and Walkie-Talkie.

The Walbrook

Developer: Minerva
Completed: February 2010
Having stood empty for over a year now, the Walbrook is definitely the laggard of the bunch. We’ve heard that its insistence that tenants take on a 15 year lease, which the banks are asking for, is putting prospective companies off.