Rental market saturates as top City firms try to offload space

A slew of law firms has returned excess office space to the rental market while rental prices are still rock-bottom, after overestimating their spatial needs.

Hammonds is trying to sublet 10,000sq ft at Devonshire Square, while Freshfields Bruckhaus Deringer wants to offload 17,900sq ft over three floors at 22 Tudor Street. The Freshfields space was previously sublet to Berwin Leighton Paisner (BLP).

Linklaters is looking to sublet 50,000sq ft at 3 Bunhill Row, although the firm is not actively marketing the property as it expects to expand into the space in the longer term.

A spokesman for letting agent FPD Savills said it was a difficult time to find tenants for offices, as both demand and rental prices were low and prime locations such as much of the Swiss Re Tower (the ‘Gherkin’) remain empty.

A spokesman for Hammonds said that the firm was looking to sublet the space following the demerger of its commercial insurance department and centralisation of the accounts department in Leeds.

Simmons & Simmons has also been looking to sublet 106,000sq ft at City Point for the last three months at £39.50 per sq ft. The space was returned to the firm earlier in the year when Clifford Chance ended its short-term sublets for the space.

Allen & Overy (A&O) is looking to sublet the largest amount of excess space. The firm has tentatively instructed letting agent Cushman & Wakefield Healey & Baker to place on the rental market 250,000sq ft of space at its future premises at Spitalfields early next year. The premises are currently under construction and are expected to be completed in June.

Although a significant amount of space, the sublets follow A&O’s strategy for taking enough space (750,000sq ft) at Bishops Square to enable the firm to grow during the 25-year term of its lease agreement.

The firm has requested several sublets on a staggered basis, so it can reclaim the space gradually as its requirements increase.

Meanwhile, BLP and Eversheds have begun the search for new premises in the lead-up to both firms’ current leases expiring.

Eversheds is looking for 130,000sq ft for when its lease on Senator House expires in three years, while BLP provisionally wants 250,000sq ft to consolidate its offices in Adelaide House and nearby St Magnus House when its lease expires in 2008.

Top sub-lessors
Firm Space to let (sq ft)
Allen & Overy 250,000
Simmons & Simmons 106,000
Linklaters 50,000
Freshfields 17,900
Hammonds 10,000
 
Source: The Lawyer