In September, I used this space to ponder the circumstances around Meta’s surrender of the lease it had taken out on 1 Triton Square, a redeveloped office building in British Land’s Regent’s Place scheme.
Facebook owner Meta said at the end of 2022 that it would not occupy the 310,000 sq ft of space it had taken, and nine months later handed over £149m to its landlord to escape what was thought to be an 18-year lease.
I argued at the time that we shouldn’t read too much into the surrender, given that the £149m needed to be viewed in the context of £2.75bn of similar costs reported by the social media giant in a nine-month period of real estate reconfiguration.
But I also wondered why Meta, aided by Cushman & Wakefield, hadn’t managed to secure a sublet tenant, acknowledging that we had no idea what went on behind the scenes to get in the way.
I’m happy to correct the record – it seems a suitable subtenant was found, but British Land had other ideas.
This week’s half-year results from the developer yielded a little clarity.
In the results presentation, British Land’s head of real estate Darren Richards said: “We’re repositioning Regent’s Place as London’s premier science campus, so occupancy is lower at the moment as we refurbish space to target both innovation and science occupiers.”
On 1 Triton Square, he explained: “This is one of two buildings Meta had at Regent’s Place. The other is 10 Brock Street, which we recently regeared with them until 2029. We’ve known for a while that [Meta] didn’t intend to occupy 1 Triton, and therefore had time to work up our own plans. So, to be clear, when Meta found an occupier for the whole building for the remainder of the term, we proactively decided to take back the space because we knew we had a much better opportunity.”
Richards added that the plan is to offer flexible office and lab space at lower levels, and prime office space above – ideally headquarters for lab occupiers. “This means we can unlock significantly higher rents, which we think could be in excess of 30% more than Meta was paying,” he said.
He went on to clarify that the Meta lease meant “effectively £70/sq ft”, and set that against estimated rental potential “on a blended basis, of over £100”, plus the £149m exit fee negotiated with Meta, cited as about seven years’ worth of rent.
“We’ve had a good run-up for this – it wasn’t exactly a surprise for us,” Richards said. “We’re looking at about 18 months in terms of the fit-out for the building. We’re already having conversations with [potential occupiers], which is underpinning our confidence on the rents.”
The episode sheds some light on how British Land views the opportunities for future growth in the office sector. Whether this particular bet will pay off, and it will laugh all the way to the bank with higher rents on top of the surrendered cash, remains to be seen.
It could wind up rueing the day it turned away £70/sq ft. But for the wider health of the sector, and science space in particular, I hope British Land is on the money.