After an exhaustive search of potential headquarters buildings in the City core, M&G has narrowed its search down to three off-plan pre-let options. They are Brookfield Office Properties’ 100 Bishopsgate, Brookfield and Oxford Properties’ 1 London Wall Place, both EC2, and Generali’s 120 Fenchurch Street, EC3.
CoStar News revealed in May that M&G had appointed Knight Frank to scour the City for between 250,000 sq ft and 300,000 sq ft of office space as the UK investment manager looked to exit its long standing home at Governor’s House, 5 Laurence Pountney Hill, EC4.
A leasing deal of that size would trigger construction work on any of M&G’s three options, all of which are dependent on securing a large pre-let before the developers commit to building them.
The 125,920 sq ft Governor’s House is let entirely to M&G’s parent company Prudential on a 20-year lease that expires in June 2018 at a passing rent of circa £5.4m a year. The rent is subject to an upward-only rent review this year.
Brookfield’s 100 Bishopsgate has always required a pre-let of around 300,000 sq ft for building work to begin. A leasing deal with M&G would provide the catalyst for a 37-storey, 900,000 sq ft office and retail development.
Brookfield and Oxford Properties ramped up their efforts to secure a pre-let for the two-building scheme, London Wall Place, at the start of the year with the appointment of GM Real Estate and Jones Lang LaSalle as joint leasing agents on the 500,000 sq ft development. A deal with M&G would let 1 London Wall Place, the 300,000 sq ft larger building of the two, in its entirety and prompt construction work.
Italy’s largest insurance firm Generali, in collaboration with Greycoat Core, is also relying on a significant pre-let to start construction on 120 Fenchurch Street, a 420,000 sq ft, £420m office tower in the heart of the City.M&G’s requirement comes at a time of renewed occupier confidence, as many of the City’s long-vacant trophy properties begin to let up.
M&G Investments, one of Europe’s leading investment managers, announced earlier this year that PRUPIM, the property investment firm with £17bn of assets under management, was to be renamed M&G Real Estate from the end of June.
PRUPIM forms part of the M&G group of companies, the asset management arm of insurance giant Prudential in the UK and Europe. Prudential bought M&G in 1999.
M&G Investments invests in and manages a range of assets including equities, fixed income and property. M&G also manages more esoteric assets within the private finance arena such as structured products, leveraged finance, project and infrastructure finance.
CBRE is the sole leasing agent on 120 Fenchurch Street; GM Real Estate and Knight Frank act for Brookfield on 100 Bishopsgate; GM Real Estate & JLL advise Brookfield and Oxford on London Wall Place.
All parties declined to comment.
Source: James Buckley, CoStar News