LONDON Nov 8 A relatively buoyant insurance
industry is helping Land Securities fill a skyscraper
under construction in London's financial district as investment
The property developer let almost 30,000 square feet on the
33rd floor of the Walkie Talkie tower to Lloyd's syndicate Ascot
Underwriting, it announced on Thursday alongside its half-year
The large investment banks that have traditionally occupied
much of the space in the Square Mile financial district around
the Bank of England are cutting jobs, reducing their need for
offices. The insurance sector, by comparison, is doing
relatively well due to its counter-cyclical nature.
"The insurance sector is growing and there is a lot of
consolidation among underwriters," said LandSec chief executive
LandSec is developing the 38-storey skyscraper with Canary
Wharf Group, majority owned by Songbird Estates. The
latest letting means the building, designed by Uruguayan-born
architect Rafael Vinoly, is a quarter pre-let ahead of
completion in 2014.
The average rent paid by the three tenants signed to date is
62 pounds per square foot, the average lease length is 17.8
years and the average rent-free period offered as an incentive
to sign for space is 31 months, Noel said.
But despite the insurance bright spot, London's financial
sector will axe 13,000 jobs next year, bringing job levels to a
20-year low in 2014, the Centre for Economics and Business
Research think tank said this week.
Developers are betting that a wave of lease breaks and
expiries over the next few years will prompt tenants to move out
of older buildings and into higher-quality new offices that are
designed to be cheaper for tenants as they need less space per
employee to occupy.
"A lot of the buildings built in the 1970s, 1980s and 1990s
are knackered," Noel said. "Given the choice of an older, less
efficient building where you have to wait 35 seconds for the
lift and a new building, it's a no-brainer."
U.S. insurer W.R. Berkley is planning to build its
own 40-storey skyscraper in the City financial district.
In central London, the Pinnacle skyscraper has stopped in
its tracks as a stump in the ground after failing to find a
major tenant to make it viable and the Shard, the European
Union's tallest skyscraper that opened in July, is yet to find
its first office tenant.
Adjusted net asset value per share at Land Securities was
slightly higher at 864 pence in the six months through September
while the value of its property portfolio edged down 0.1 percent
to 10.9 billion pounds ($17.4 billion).