The sporting legacy of the London 2012 Olympic Games may still be in doubt. But the securing of a major financial occupier at Stratford this week may silence some sceptical about the site becoming a new commercial district.
The Financial Conduct Authority’s decision to vacate Canary Wharf in favour of a new 500,000 sq ft headquarters building at Lend Lease’s and London & Continental Railways’ The International Quarter puts Stratford on the map as an office location.
The watchdog, which regulates the consumer-facing credit industry, is close to agreeing terms to lease around 425,000 sq ft at a building due to be built on plot five in the southern half of the 22-acre site next to the Queen Elizabeth Olympic Park, E20.
It is expected to formalise a deal next week for a 20-year lease, which will include options to take on the remaining 75,000 sq ft in the building in the longer term.
Rents are expected to be under £35 per sq ft, with a review at five years.
At its Canary Wharf HQ, 25 North Colonnade, the FCA is currently paying around £35.85 per sq ft.
For Lend Lease and LCR it is a landmark deal for the 4m sq ft project. BNP Paribas Real Estate and JLL were appointed lettings agents on the scheme in 2011.
The building will form part of the 1m sq ft first phase, which includes two residential buildings of 15 and 30 storeys called Glass House Gardens, construction of which will start this summer.
A speculative office building of 250,000 sq ft will be built alongside the FCA’s new building at plot six, the leasing of which will now become a priority for BNP PRE and JLL.
The FCA’s decision to move to Stratford follows several false dawns for the scheme.
Major occupiers such as the European Medicines Agency, Google and the Financial Ombudsman have considered Stratford over the past few years but all have opted for more established options elsewhere in the capital.
With an anchor tenant in place, TIQ will now target smaller occupiers and requirements of around 100,000 sq ft for the next speculative building and the remaining space in with the FCA.
Lend Lease group chief operating officer and chief executive in Europe Dan Labbad said: “The development heralds a new generation of offices in London which will have a similarly transformative impact to the development of Canary Wharf more than 20 years ago.
David Joy, LCR chief executive, added: “This is a sign that this new part of the capital has arrived and is delivering on our original vision for Stratford City as a mixed-use metropolitan centre.”
Canary Wharf Group and the FCA’s current landlord Evans Randall fought hard to retain the FCA in E14, with both offering highly competitive rents and presenting themselves as the safe option for talent retention.
But the age and condition of 25 North Colonnade, together with its uncertain ownership – the private bank missed a repayment on the £205m loan securing it last autumn – proved too much for the FCA.
Canary Wharf’s 1 and 10 Bank Street at Heron Quays, which was also on the FCA’s shortlist and was below £45 per sq ft, ultimately failed to overcome the perception that Stratford was a better-value, more sustainable and more politically appealing option.
FCA chief operating officer, Lesley Titcomb, said: “We have chosen the Olympic Park in Stratford as our preferred option as it provides us with the opportunity to develop a modern, efficient and sustainable building for our staff and will help to attract the right people to the FCA in the future.
“This will also represent good value for money for our fee-payers,” she added.
DTZ head of central London agency Richard Howard said the decision highlighted occupiers’ willingness to consider new areas of London for reasons “not just tied to pricing”.
Jack.Sidders@estatesgazette.com
