Bid battle set to hike rents
A 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.
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.
Blackrock has been looking to move out of its dated 1970s building on King William Street since its takeover of Barclays Global Investors.
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.
Macquarie was previously looking at the Ropemaker Building and Watermark Place – which have now been snapped up by Bank of Tokyo Mitsubishi and Nomura respectively.
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.
Sources believe the competition for the office will drive the price up from the current average City rate of £42.50 per sq ft to £45 per sq ft.
Knight Frank City partner Bradley Baker said: “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.”