Cushman & Wakefield will have to pay £2.8m a year extra for its European headquarters in London’s West End after a rent review was concluded this week.
The rental hike, which is thought to be in place for the next five years, is an unfortunate one in a period when the property industry is trying to cut costs, but would not have been a surprise to C&W.
C&W moved its European headquarters in October 2001 after taking an assignment of oil company Chevron’s lease.
The initial rent was £37.50/sq ft meaning C&W was paying around £2.6m a year for its 70,000 sq ft office.
In March 2006 Invista Foundation Property Trust bought the 114,000 sq ft building for £127.5m, reflecting a net initial yield of 3.5%.
The 2008 rent review fell in June this year. DTZ director Rob Senior acted for Invista and C&W partner Ross Hepburn acted for C&W.
Property Week understands that an arbitrator was appointed to deal with the rent review.
Tony Guthrie at Drivers Jonas was appointed as an independent expert to advise the arbitrator.
Invista is understood to have used evidence from a lease granted to Invesco in May 2008 as evidence that rents in the building were at around £90/sq ft.
Invesco had been paying £55.25/sq ft for 15,000 sq ft on the first floor. It surrendered its lease and simultaneously agreed a 15-year lease paying £90/sq ft.
In June this year Ziff Brothers Investments (ZBI), a US venture capital firm, took 16,000 sq ft in Delancey’s neighbouring 40 Portman Square at a rent of £115/sq ft. King Sturge advised ZBI and Savills and CB Richard Ellis were letting the space.
In a net asset value announcement on 29 October this year Invista Foundation Property Trust listed C&W as its third biggest tenant, contributing 4.2% of its rental income.
43-45 Portman Square was also listed as its second largest asset, with its 21.6% share of the asset valued at £28.4m.
In June 2007 Drivers Jonas had its West End rent at 6 Grosvenor Street increased by 50% from £60/sq ft to £90/sq ft. DTZ has its rent review at Curzon Street impending where it occupies less than 30,000 sq ft paying £50/sq ft.
DTZ had occupied 60,000 sq ft but moved its staff to its City office, one of the reasons being the impending rent review.