Royal Mail moves to Broadgate as BL/Blackstone let 70,000 sq ft in EC2

10th July 2013

Royal Mail, advised by GM Real Estate, has completed a deal to take the unrefurbished space at Broadgate at a rent of just over £30 per sq ft, after the group identified a rare opportunity to secure prime office space in the City core for well below prime rents in the area.

Separately, British Land and Blackstone have agreed terms with PR firm Precise Media at 1&2 Broadgate, which is under offer to take 25,000 sq ft in the building at a rent of £30 per sq ft until 2019. It will move out of Royal Mint Court, also in the City.

The two deals mean BL and Blackstone have secured tenants for 71,000 sq ft of the 107,000 sq ft of former UBS space which the pair has been trying to let since February.

Royal Mail will also occupy the secondhand Broadgate space on a lease until 2019 - part of a wider real estate strategy which has seen the group reduce the amount of space it occupies, and well as the overall cost of its occupational property.

Most of the Royal Mail staff to relocate to 1&2 Broadgate will move from Rathbone Place, which the postal operator sold to GPE two years ago, and must fully vacate over the next two weeks. Royal Mail had previously occupied more than 100,000 sq ft at Rathbone Place.

The deal, which is likely to be seen as one of the most cost-effective City lettings for a while, will not see Royal Mail reduce its footprint at its current headquarters at 100 Victoria Embankment, where it occupies about 30,000 sq ft, or Mount Pleasant, which will also absorb some overspill of staff from Rathbone Place.

The lettings will allow British Land and Blackstone – or whoever the latter sells its stake in the development to - to consider refurbishment options for 1&2 Broadgate after 2019.

Royal Mail spokesperson Sally Hopkins said: "Royal Mail has agreed to lease 46,000 sq ft of office space at 1-2 Broadgate EC1 to 2019. The additional space will complement Royal Mail's head office at 100 Victoria Embankment and the newly refurbished offices at Mount Pleasant. "Some of Royal Mail's non-operational people currently based at the Rathbone Place facility, which was sold in 2011, will move to the Broadgate offices."

CoStar News revealed in February that BL and Blackstone had instructed CBRE and DTZ to find tenants for the 107,000 sq ft at 1&2 Broadgate, which is spread across the ground, first and second floors.

The space was being offered to coincide with ICAP’s lease expiry in the EC2 building.

In January, BL and Blackstone received formal notification from English Heritage that the Secretary of State, Maria Miller MP, had issued Certificates of Immunity for Broadgate Phases 1-4, of which 1-2 Broadgate is a part.

ICAP chose to remain in 1&2 Broadgate last year following an extensive search for up to 250,000 sq ft of office space in the City. It occupies 175,000 sq ft in the building with a lease break in 2016.

Swiss bank UBS’s former space at 1&2 Broadgate became surplus to requirements after it signed a deal to move into a 700,000 sq ft office development, also on the Broadgate estate, last January, in what was the largest pre-let ever agreed in the City.

Ministers are expected to announce further details of the privatisation of Royal Mail later, with the government expected to press ahead with its plan for a share flotation, possibly by the autumn. The sale is likely to value the business at £2bn-£3bn, and at least 10% of shares will be set aside for postal workers.

According to Sky News this afternoon, CVC Capital Partners has told the government that it will revive its interest in the group if attempts to privatise the postal services group through a stock market listing are unsuccessful.

 

Source: James Buckley, CoStar News