CORFAC News

International co-working specialist, We Work, is now the largest single office occupier in London. A string of deals has seen the provider lease or acquire more than 2.25 million square feet of office space in the U.K. capital during the past 18 months. 

Farebrother/CORFAC International has let more than 100,000 SF to WeWork across central London. In Midtown, the firm let 69,000 SF to WeWork at Aldwych House and also leased a further 49,000 SF to the operator at The Cursitor Building. The Cursitor letting was done at a rent of £63.50 per SF ($85 USD PSF).
Union Street Partners, Farebrother’s joint venture firm which operates in London’s South Bank market, has also leased 95,000 SF to WeWork at the South Bank Central development. The project is owned by UK fund, Hermes, and its North American partner, CPPIB. The space is next door to WeWork’s very first centre in London at Sea Containers House which opened just over three years ago.

In what was an interesting market test of the WeWork covenant, U.S. private equity firm, GI Partners, and its U.K. partner, Rowan Asset Management, have now sold Aldwych House at a sub 5% yield. 

“WeWork is having a profound effect on the London market. Its acquisition program is dramatically reducing headline office vacancy, but of course the space becomes immediately available when WeWork looks to re-let its customers," said Alistair Subba Row, Senior Partner with Farebrother. “The effect of this is being particularly felt across the London Midtown and South Bank markets in which we specialise. In these locations, there has always been a concentration of service office providers who appeal to the wide range of businesses who need to be at the core of London.”

By the end of the third quarter of this year, office take-up in London’s Midtown was 1 million SF higher than in the corresponding period in 2016.
Total office take-up at end of the third quarter had reached 2.4 million SF in comparison to the 1.4 million SF that was let in the first nine months of last year.

“We expected there to be a demand bounce-back following the political shocks of last year, but the rate of take-up in Q3 was also 24% above the 10-year quarterly average so the market is clearly being driven by more than just the decision-making that was on hold last year. Most significantly, we continue to see a succession of new types of business coming into Midtown as illustrated by lettings to this year to Spotify, Verizon and Framestore,” Subba Row added.

Farebrother has also been active representing occupiers who need to relocate in London and recently advised leading accountancy firm, haysmacintyre, on a move to a new 25,500 sf headquarters.

“Many London businesses need to move to larger offices but are effectively stopped by their existing space commitments. In this instance, we found an occupier to take haysmacintyre’s existing offices, identified suitable expansion space and negotiated both the assignment of their old offices and the off-market acquisition of the new HQ space. In the year to date, we have helped businesses relocate from more than 100,000 sq ft of central London offices into enhanced space, and are currently instructed on a further 150,000 SF of occupier requirements. Enabling occupiers to complete this type of back-to-back disposal and acquisition is vital to supporting business expansion,” Subba Row added.