Great Portland Estates

Great Portland Estates Allocates £900mil For Flexible Office Space

UNITED KINGDOM – As lockdown restrictions are relaxed and staff return to their workplace across the country, London-based landlord Great Portland Estates announced that it intends to invest £900 million (US$1.2 billion) in flexible office space, according to a press release published on Wednesday (19 May).

“Whilst uncertainty remains, we are encouraged by the recent acceleration in enquiries we are receiving from prospective occupiers, particularly for our prime Grade A and flex office products. With limited supply across central London over the next few years, we can expect innovative, flexible and well serviced space with strong wellbeing and sustainability credentials to command an increasing premium (compared) to poorer space,” said the developer’s Chief Executive Toby Courtauld.

“As a result, we expect to grow our flex office offer and to bring forward our near-term development programme, committing circa £900 million of capital expenditure to deliver exemplar, net zero carbon spaces designed to satisfy the changing needs of tomorrow’s occupier.”

During the fiscal year ended 31 March 2021, the company revealed that flexible space accounted for 266,700 sq ft or about 13 percent of its office portfolio. This translates to 22 percent growth compared to the prior financial year, and the company is looking to add another 134,100 sq ft.

Great Portland Estates also shared that the vacancy rate of its office portfolio stood at 6.6 percent during the period under review, with an average office rent of £56.70 per sq ft, but 7.8 percent of the leases are reversionary.

The landlord disclosed that its pipeline of projects “remains substantial”, with an additional 8 schemes with a combined area of 1.3 million sq ft. It has also submitted three planning applications for the year involving 771,700 sq ft sq ft of space, with another imminent submission.

“Occupiers and investors are increasingly seeking highly sustainable spaces that are technologically advanced, flexible and provide healthy, productive environments. Our development pipeline is primed to deliver these sought after spaces and we had a busy year, making progress across the programme,” noted the developer.

“We completed our developments at The Hickman, E1 and Hanover Square, W1 which together delivered 296,800 sq ft of best-in-class space and are already 63 percent let or under offer. Today, we have a further two schemes on-site, including the recently committed 50 Finsbury Square,” it added.

Last week, Great Portland Estates announced that it has completed leasing all of the office space at 18 Hanover Square, with a 16,500 sq ft lease on the 1st floor to an unnamed financial services firm.

The last available space at the 9-storey building was taken up after less than 6 months of practical completion of the property.

The landlord added that overall contracted office rent at 18 Hanover Square has reached £14.8 million, with a weighted average unexpired lease term of 15.7 years.

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