M&G is closing in on a string of further lettings at its 40 Leadenhall 'Gotham City' mega development in the City of London, as the wider Square Mile office market picks up strongly, CoStar News can reveal.
Last week M&G said the 900,000-square-foot development was 70% prelet after confirming a third letting, of 50,827 square feet, to global fintech firm Acrisure on a 20-year lease.
It joins insurance group Chubb, which CoStar News first revealed in May last year had signed for around 85,000 square feet of offices. M&G separately confirmed international law firm Kirkland & Ellis had signed for a minimum of 215,000 square feet.
The Acrisure letting means M&G has formally confirmed 350,000 square feet of prelets. CoStar News understands that the landlord is finalising deals that would take the building to around 530,000 square feet of preleased space.
Firstly, law firm Kirkland & Ellis has now taken up an option for a further 80,000 square feet.
In addition, market sources said Ark Insurance, the reinsurer based at 30 Fenchurch Avenue, is in talks to take 22,500 square feet, while Shawbrook Bank, the challenger savings and lending bank, advised by JLL, is in talks to take 37,000 square feet on level 10. The bank is expanding from the 13,049 square feet it leases at 9 Appold Street.
Finally, McGill & Partners, the reinsurance broker based at 100 Leadenhall Street, is in talks to take 35,000 square feet.
When taken together the lettings take the scheme to 70% prelet just under a year before its completion.
Progress on leasing of the development comes as CoStar News has revealed a string of lettings elsewhere across the City in recent days. Stanhope and Mitsubishi are closing in on around 300,000 square feet of lettings at their flagship 8 Bishopsgate tower in the City, while Dutch lender Rabobank has signed for a 50,000 square feet headquarters and Capgemini for an 85,000-square-foot headquarters.
M&G bought the scheme in 2019 on behalf of the £129 billion Prudential With Profits Fund.
The building has been designed to be among the UK’s first to achieve the NABERS certification – an energy efficient standard that measures how a building is designed to operate and how it performs in use. It will also be the largest office development to complete in the City of London next year.
In announcing the Acrisure letting M&G said the "City is back" adding that recent reports from leading agents indicate that tenant demand for quality office space continues to be buoyant, accounting for 95% of leasing in the City of London office market. In the second quarter of 2023, around 70% of office space in central London was for prelet, newly-built or refurbished properties, up from 66% for the same period in 2022 and up 9% in the City, it said.
Tony Brown, global head of real estate at M&G Real Estate, said in a statement: “One point two million square feet of workspace was let during Q2 this year – a significant sign that the City, in particular, is back.”
40 Leadenhall is targeting the BREEAM Excellent standard, the WELL Platinum rating and is aspiring to the Platinum Wired and SMART building certifications. It will include a fitness studio, a 22,500-square-foot treatment and changing area, a wellness suite, library and a 30-seat cinema room. Employees will be able to use touchless technology to book spaces at the 200-seat auditorium, two restaurants, 17 outdoor green spaces and terraces and the communal 11th floor rooftop clubhouse.
M&G Real Estate is part of M&G’s £76.7 billion Private Markets division.
CoStar figures show office deliveries are set to ramp up sharply in London in 2023, which is set to be the capital’s busiest year for new completions in two decades.
Close to 10 million square feet of office space is due this year if all projects complete on schedule. This would be the highest annual figure since 2003, when a wave of new towers completed in Docklands and the iconic Gherkin, or 30 St Mary Axe, topped out in the City.
Mark Stansfield, head of UK analytics, CoStar, said: “Office take-up in the City of London has actually held up better this year than the doomsayers would suggest, with leasing in the first half of the year up 10% on the same period last year.
"But these bumper lettings nonetheless indicate momentum picking up sharply heading into the autumn as occupiers continue to upgrade into and see value in premium quality offices with a wealth of amenity. It brings availability in the City down to just over 12 million square feet, the lowest level in three years and down from a peak of 14.8 million square feet in mid-2022, although a succession of deliveries is likely to push this up again over the next year or so.”
Savills, Knight Frank and Cushman & Wakefield are joint agents on 40 Leadenhall Street, formerly dubbed Gotham City. Newton Perkins advised Acrisure, JLL is advising Shawbrook.
M&G Prudential bought the site in 2019 from AimCo and Nuveen Real Estate, through its central London offices platform.