It must be the most drawn out tease for a very long time. Allen & Overy (A&O) has been vigorously courted by a pack of lovesick Valentines just dying to become its next HQ. Chased by Spitalfields, 201 Bishopsgate, Lehman Brothers' Northgate Scheme and Canary Wharf, A&O has been making the most of the current letting market. But all the advantages of playing tenant in a market where tenant is king must be starting to wear off.
No sooner does the partnership settle on one option – Spitalfields – than option B comes up with a new incentive to tempt A&O back. But time is running out at New Change. Sources say a deal with Spitalfields is more than close, but A&O still hasn't signed. So what are the key issues?
One key negotiating point is the extent to which a prospective landlord will allow A&O to take a lease that will minimise its risk as and when the partnership decides to become a limited liability partnership. Clifford Chance has done it, Withers has done it, and everyone else is thinking about it. So A&O needs the option for getting out.
It also needs planning certainty for the new scheme it signs up to – something Spitalfields still can't offer. The developer's clashes with local residents and most notably with pressure group Smut (Spitalfields Market Under Threat) have done much to worry A&O.
After a week of public consultation last month, the Spitalfields Development Group is preparing a new application – minus Foster's much ridiculed ski slopes. The application will go in towards the end of the month, and then the waiting begins. Not an ideal situation for a would-be tenant. A nightmare scenario could see A&O waiting in vain for planning approval, by which time options such as 201 Bishopsgate would be long gone. And Smut is not about to retreat – it is about to start lobbying for the office scheme to be moved to the land between ABN Amro and the market, currently earmarked to become a windswept City plaza.
But British Land's 201 Bishopsgate scheme – the only other serious contender now – is also flawed. Principally, it doesn't offer the basement space law firms need. Imagine any partnership convincing itself that it should shell out £60 per sq ft, say, for mere storage space.
The pressure is well and truly on for A&O to make its final decision, all of which must be leaving Clifford Chance feeling pretty smug as it prepares to move into its flashy new HQ… even if it is in Canary Wharf.