Downturn forces News International and search engine to rethink London relocations
Two of the world’s biggest media companies, News International and Google, have dealt a huge blow to the London office market by shelving plans for new headquarters.
News International has decided against a $1bn (£540m) relocation to a 500,000 sq ft headquarters after plans to sell its ‘Fortress Wapping’ site for £200m were hampered by the credit crunch and declining land values.
Rupert Murdoch’s media empire is instead thought to be in talks with Land Securities to take 150,000 sq ft of overflow space at the developer’s nearby 562,000 sq ft Thomas More Square campus.
It is also discussing the potential for a longer-term relationship, which could involve setting up a preferred developer agreement with LandSecs to redevelop its 15.3 acre site, when market conditions improve. This strategy would fit in with LandSecs’ ‘cluster policy’ of establishing large land holdings in one area.
LandSecs also has a potential joint venture partner in Canada’s Cadillac Fairview Corporation, which bought a 50% stake in Thomas More Square for £131.5m last November on behalf of the Ontario Teachers’ Pension Plan Board fund.
The decision will be a blow for the market, which was hoping for a larger letting when the Sun-to-Sunday Times publisher kicked off the search 11 months ago. It shortlisted UBS and Oxford Properties’ Watermark Place and Minerva’s St Botolph’s scheme in the City of London and Canary Wharf’s 25 Churchill Place. It also considered Henderson Global Investors’ Beaufort and 133 Houndsditch schemes in the City for overflow space.
News International’s decision will be tough in the same week that Google halted its 250,000 sq ft London headquarters search.
Google launched its search last July and shortlisted four schemes: Legal & General and Mitsubishi Estate Company’s Central St Giles in central London; British Land’s Euston scheme; Argent’s King’s Cross; and Development Securities’ Paddington Central.
It occupies 80,000 sq ft at Henderson and Grosvenor’s Belgrave House on Buckingham Palace Road on a lease that expires in 2020.
It has taken an additional 35,000 sq ft from baa and Rentokil at more than £80/sq ft.
Sources say Google’s search is in ‘abeyance’ because it is assessing its options in light of the economic conditions, which may slow its phenomenal growth. It can still reconsider its options at a later date. Another media occupier, Bloomberg, is still assessing options for a potential 300,000 sq ft City headquarters.
Corporate Property Advisers, Jones Lang LaSalle and Granville Jones advise News International; Savills acts for LandSecs; Atisreal advises Bloomberg; CB Richard Ellis represents Google and Noble Harris Partnership advised on its London search.
All parties declined to comment.
Murdoch’s property strategy at www.propertyweek.com/murdochhqrevealed