HSBC has exchanged to let its new London headquarters, relocating from the more than 1 million square foot it has occupied in Canary Wharf for more than two decades, to 556,000 square feet at the former British Telecom head office near St Paul’s Cathedral in the City of London.
The relocation is expected to take place in 2027, when the bank's lease on the 45-floor tower at 8 Canada Square expires. Market sources said HSBC is paying a blended rent of around £87 per square feet.
CoStar News first revealed the HSBC requirement was for between 450,000 square feet and 500,000 square feet and would take in the City as well as staying in Canary Wharf. Cushman & Wakefield has been advising.
According to Bloomberg, HSBC was presented with a shortlist of possible alternatives, which included Chinese Estates Holdings' Evergo Tower redevelopment of the former headquarters of Goldman Sachs at River Court, 120 Fleet Street.
Other options on the list included the former home of the European Bank of Restructuring and Development at 175 Bishopsgate plus options at Canary Wharf Group's Wood Wharf at the Docklands site.
The bank opted for BT Group’s former headquarters at 81 Newgate Street in St Paul’s, which is being redeveloped by Orion Capital Managers and Pella Real Estate Partners as Panorama St Paul's. Orion has been redeveloping the building to improve its environmental credentials and offer roof terraces as well as 556,000 square feet of offices. Tejat V Lux bought 81 Newgate Street from BT in August 2019 in partnership with Orion Capital Managers.
CBRE and Cushman & Wakefield are letting agents at 81 Newgate Street.
In a statement provided to CoStar News, James Meikle, head of London occupier representation at Cushman & Wakefield, said: “As its name suggests, Panorama St Paul’s will offer stunning panoramic views over the city including nearby St Paul’s Cathedral, one of London’s best-known buildings. Sustainability, ESG and wellbeing have been at the heart of this project from the outset, as HSBC seeks to align its workplace with its corporate commitments. Panorama St Paul’s delivers on every count and securing the building as HSBC’s future global headquarters completes one of the most high-profile occupier transactions in London for years.”
A spokesperson for Orion Capital Managers said: “Orion is proud to welcome HSBC to Panorama St. Pauls, a best-in-class office development with industry-leading sustainability credentials, in one of the largest European leasing transactions this decade.
“The leasing agreement with HSBC underlines the resilience of demand for top-quality space in the City of London – a strong consideration in our decision to invest in the asset.
“The move is a vindication of our strategy to develop outstanding offices in prime locations within European gateway cities with the amenities that allow occupiers to attract and retain talent by creating a ‘buzz’ for their workforce.”
An HSBC spokesperson confirmed the lease had officially signed but said it would not be providing further "specifics".
CoStar's head of UK analytics Mark Stansfield added: "While teed up back in June, the completion of this blockbuster letting – at what is a near-record rent for non-tower City space – provides a further shot in the arm for the City's office market, which has seen a string of big deals over the autumn amid keen demand for high-quality, sustainable space in the Square Mile."
Responding to changes in hybrid working, and the lease expiry, HSBC announced in September of last year that it planned to undertake a review of the best future location in London for its global headquarters, including the option of staying in the current building. HSBC said its ambition is to have an "even more flexible and dynamic head office that meets the needs of colleagues and clients".
Cushman & Wakefield said a global multi-disciplinary team will ensure that HSBC’s real estate strategy is "informed by market-leading insight on workplace experience, sustainability, and wellness".