Macquarie to move to CWG's new London office-source

* Macquarie to move to new London office-source

* Bank to pay 43 stg psf for new space-source

LONDON, Oct 22 (Reuters) - Australia's biggest investment bank Macquarie Group (MQG.AX), in the midst of an expansion drive, is set for a move to a new office building in London's financial district, a source familiar with the deal said. Macquarie has agreed a deal to occupy 220,000 square feet of space in the 270,000 sq ft Drapers Gardens project in the City of London, currently being developed by Songbird Estates' SBDb.L Canary Wharf Group (CWG), the source said on Thursday.

The Australian bank, currently occupying the Citypoint building in London, will take up a 20-year lease in the project at about 43 pounds per sq ft rent annually, receiving a rent-free period of four years as incentive, the source added.

Lettings activity for UK business property in the third quarter moved higher for the first time in over two years, led by a recovery in the London office market, although incentives from landlords continue to rise, a report said on Thursday. [ID:nLM682555]

CWG, operator of the Canary Wharf business estate in London's Docklands district, is jointly developing the project, due to be completed before year-end, with Exemplar Developments.

Macquarie is being advised by DTZ (DTZ.L), and the developers are advised by CB Richard Ellis (CBG.N) and Jones Lang LaSalle (JLL.N). The companies declined to comment.

Songbird, which in August unveiled a 895 million pound ($1.48 billion) share sale to pay off its debts, last month boosted its stake in CWG to 69.3 percent from 60.8 percent. [ID:nL018165] (Reporting by Daryl Loo; Editing by Rupert Winchester) (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)