A slew of UK government agencies and quango bodies are reviewing their corporate headquarters, putting more than 13.2m sq ft of London office space at risk.
More than half (54%) of this space is rented in the West End with some of the city’s highest rents, with the public purse fronting rents of up to £90 per sq ft, according to figures from Radius Data Exchange.
Government departments are estimated to contribute £435m in rents every year, with large annual contributions of £14m from HM Treasury, £13.2m from Transport for London and £11.8m paid by HM Revenue & Customs.
Major bodies including the Greater London Authority and the Department of Health and Social Care’s NHS Property Services have set out plans to slim down their central London office space in a bid to cut costs in the wake of the Covid-19 outbreak.
The Greater London Authority is consulting on a relocation to the Docklands after 20 years at City Hall, ditching 122,800 sq ft at £36.50 per sq ft in SE1, in a bid to save up to £12.6m a year.
The GLA is under huge pressure to cut costs to retain jobs and services to aid London’s recovery.
Sadiq Khan said he is considering utilising the break clause in 2021, adding: “In the current financial context, and with the looming black hole in London’s public finances, it would be negligent not to do so.”
NHS Property Services is reviewing an exit at its City of London headquarters at 99 Gresham Street, EC2V, as part of a cost-cutting drive to save £33m a year.
It is considering leaving or reducing its 27,416 sq ft office, rented at £65 per sq ft, when the lease expires in January 2022.
In an exclusive interview, NHSPS chief executive Martin Steele told EG: “I think every single major corporate is looking at their property overhead and thinking ‘what do we do?’”
A number of central government departments have moved out of the capital in recent years, instead opting for regional hubs in Bristol, Leeds and Birmingham among other major cities. In the 2020 Budget, chancellor Rishi Sunak announced plans to move 22,000 civil servant jobs out of London, with 750 Treasury roles moved to an “economic campus” in the North.
This week the Ministry of Housing, Communities and Local Government will take 48,787 sq ft in Birmingham, at Galliard and Apsley’s B1 office for just £15.75 per sq ft.
HM Treasury currently occupies 17,978 sq ft at Eastcheap Court, EC3M, paying £53.50 per sq ft, with a lease expiry due in March 2021. That same month the Passport Office is due to end a lease for 68,394 sq ft at Globe House, SW1V.
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