Barings rent deal boosts City hopes

Property development in the City could get a kick-start following one of the biggest deals since before the recession, say lawyers and corporate estate agents.

Freshfields and Slaughter and May have just completed a top-price (u35 per sq ft) single letting on Scottish Widows' landmark 235,600 sq ft office development at 60 London Wall, EC2 to bankers Barings Brothers and Baring Securities.

The deal is the largest letting of a new City block since the European Bank for Reconstruction and Development (EBRD) took space in Broadgate in 1991.

The deal represents a successful outcome for Scottish Widows after turning down smaller letting opportunities to find a single tenant.

The deal is based on a 22-year lease on the whole building with no break clauses, at a rent of u7.75 million a year.

Geoff Le Pard, Freshfields' head of property, saw the deal for Scottish Widows through from inception and development to letting.

"It's certainly the biggest letting I have personally been involved in. It must help confidence that space like that is going to major players like Barings," says Le Pard.

Robert Calman, City director of estate agents Jones Lang Wootton, which managed the deal, says the u35 rental is already influencing negotiations on other properties and highlights the shortage of grade A City space.

"It's good news for landlords and investors, and it will kick-start the development pipeline," he says.

Only months ago lettings in the City core were scraping the bottom at u30 or less.

Meanwhile there are very few developments with grade A space of u100,000 sq ft or more available. Next year will present a "serious shortage," thereby galvanising new development. "The rental on 60 London Wall will encourage developers to press the development button," says Calman.