THE year 2018 beckons a further shift in the London office market with investors becoming increasingly cautious about rental prospects.
It was reported that 2018 has seen overall vacancies rise to 12.2 million sq ft across London, compared with 8.5 million at the start of 2017.
The increase has impacted price of the rent and make 2018 the prime time to invest in London’s Grade A and B office buildings as rentals are more affordable.
According to the latest West End Office Market Watch from Savills, technology and media occupiers were the busiest at the start of the year, accounting for 56 per cent of the space taken by end-January. They were followed by the serviced office sector, at 18 per cent, and insurance and financial services at 10 percent.
One of Malaysia’s biggest office space owners in London is Permodalan Nasional Bhd (PNB) which has signed up long-term lease contracts with tech and law firms, as well as bankers.
LONDON OFFICE MARKET
PNB owns several assets in London such as Aviation House, PNB House, 90 High Holborn, One Exchange Square and Milton & Shire House.
Recently the fund manager inked a 20-year agreement with WeWork Co Inc, an American shared workspaces technology startup, to lease more than 130,000 sq ft of office space in the historic Aviation House.
WeWork will occupy eight upper floors in the Grade A office and retail building.
PNB did not disclose the value of the lease contract but said WeWork’s presence will be part of the rejuvenation of Aviation House.
Aviation House, built in 1991 is located across the Holborn Underground Station with close proximity to the upcoming Crossrail, which is slated for completion in December next year.
PNB president and group chief executive officer Datuk Abdul Rahman Ahmad in statement said the long-term lease with WeWork will provide the opportunity to transform the building and enhance its value.
According to Abdul Rahman, it has been almost 20 years since Aviation House was last revamped.
“PNB looked forward to seeing the improvements and vibrancy that WeWork would bring to the building,” he said.
Aviation House was acquired by PNB in 2014. 90 High Holborn and One Exchange Square were acquired for £550 million (RM2.6 billion) in 2012.
The two buildings, which have single tenancies, have been generating good yields for PNB. One Exchange Square is tenanted by the European Bank for Reconstruction and Development, a quasi public organisation, while 90 High Holborn is the headquarters of law firm Olswang.