The GMGap Blog

The increased demand for prime office space in London may be heartening to property owners who were stuck with untenanted property on their hands during the recession. However, new demand may also create new problems. The Square Mile, one of the most favoured commercial destinations in London, may run out of space very soon.

The fear that the Square Mile will be filled up comes as a reaction to the announcement by Macquarie about their shift to the colossal office space in Drapers Garden, London. The firm will occupy one of the largest buildings adjacent to the Bank of London. It is expected to use up around 220,000 sq ft of area here. It has signed an attractive deal for a 20-year lease that will allow them rent-free residence here for the first 4 years. Beyond this period, the group has agreed to pay rent at the rate of £43 per sq ft (click for offices to rent London info).

Macquarie is a finance group based in Australia that has seen steady growth over the years. Even during the recession, the group managed to stay afloat without governmental assistance. This has established its stability and enhanced its credibility in the markets.

Grade A buildings in the Square Mile have also been let out to Mitsubishi, the Bank of Tokyo and Nomura. With the Macquarie tenancy, much of the space here will become unavailable. Groups like BlackRock and Bloomberg are also reported to be looking for space in the same area. These fears of impending shortage of office space are leading property developers to believe that two tier office spacing may offer a solution to the scarcity.