A investment management company acquiring space in a rising rental market.
The company were occupying short term space in Marble Arch Tower, W1 prior to the commencement of its redevelopment programme.
They faced an exit deadline and, whilst preferring to stay in the immediate vicinity, were well aware of rising rents across central London and especially the highly priced West End markets.
Compass helped to formulate the sizing brief (c.6000-7000 sqft) and were instructed to begin searching for options in the more affordable locations, east of the West End.
At the time, the Holborn market was at it’s ‘tightest’ with vacancy rates at all time lows, virtually ruling it out early on in the search; the City was beginning to look relatively good value, so a number of options were considered there until a floor was identified in the fast moving SE1 market; not a previously considerded location.
The first real issue was that this was the last available floor in the recently refurbished building and rents were moving rapidly upwards.
The leasing team were reviewing their marketing strategy and were advising the Landlord to market the floor at an additional £5psf, so Compass had to move quickly if they wanted to secure the space at a rent below £50psf (per square foot).
Previously desired lease flexibility options had to be re-considered as part of a trade-off with affordability and Compass advised on similar market situations where the balance of negotiating power had shifted quickly in favour of a Lessor.
Compass’ role was to manage client expectations and calmly express a reasonable negotiating stance with the lessor’s advisor, and only at the right time suggest that a principal to principal meeting be held to reassure the lessor that the lessee was the party worth treating with in the face of mounting pressure to re-market the floor to secure a higher rent.
This was a delicate negotiation where the lessee’s position was far from strong, but we were successful in securing the floor at a rent below £50psf and retained a 5th year break option. Evidence was clear that the lease was reversionary the moment the lessee moved in.
The client was a young and growing legal practice occupying serviced office space in the West End.
Compass were introduced to them via another Compass client as it was becoming clear that expanding within this operator’s premises was going to be physically difficult and very expensive.
Compass’ initial brief was to secure short-term, fitted out space which they could move into quickly and relatively cheaply, so as to cater for their growth over the next 2-3 years.
Three suitable options were seriously considered, two in the City and one in the West End and terms were nearly agreed on one in particular before being gazumped. This put paid to the search for many months and it also coincided with a temporary slow down in their growth.
Some 9 months later the search was re-started, as their growth dictated, however many key staff were eager to remain in the West End where many clients’ offices were. Compass produced rental evidence which made it clear that the business could not realistically sustain a presence there and suggested that by venturing further East into the City the firm could make good use of the Central Line whilst genuinely saving some 50% on rental overheads.
Prime West End rents at the time were over £100 psf whilst the building which was finally identified was seeking a rent of £54psf. The building is located less than 100 metres from Bank tube station, allowing good and frequent access to clients in the West End; a clear, conscious statement to clients that unnecessary overhead is not being wasted on prime West End premises.
Our client was preparing a large property for multiple, mixed use occupation and required advice and support on how to approach this exercise. The property was located overseas and included offices, retail and residential. Our brief was to deliver a strategic plan based on a desktop exercise.
Using our experience of having launched a number of large multi-occupied properties, we were able to request sight of all necessary information such as the architectural overview, floor plans, mechanical & electrical, security, and other hard services detail to begin developing a management structure to meet the requirement of the future occupants.
Having a knowledge of how a property has been constructed helps but to develop the right management strategy. You also need to understand how the property will be positioned in the local real estate market place. Is it prime office space to be used for the receiving of clients or is it to be positioned as a back office operation? These considerations can only be provided by the client and letting agent and formed part of our overall consideration.
This property was to be positioned to receive clients and so the standard of service delivery, quality of maintenance & general feel had to be of the highest quality and the correct,high quality on-site resourcing levels needed to be included in our overall strategy.
We delivered an overall strategy that allowed the property to be positioned correctly, at a service charge cost in line with the correct levels for that market.
Our invaluable experience in major building delivery in core markets was essential to assist the client in correctly addressing all aspects of the building’s operation as well as its appeal to both the local and international occupier base.