A UK subsidiary of Arup Group has signed an agreement to pre-let 133,600 sq ft at 80 Charlotte Street, reports Derwent London.
The completion of the development is due in the second half of 2019.
Simultaneously, the Group has agreed a conditional put and call option to sell 8 Fitzroy Street W1 for £197m to Arup, who occupy the entire building, with completion expected on 23 June 2017.
At 80 Charlotte Street, Arup has agreed a 20-year lease on the first to third floors as well as part of the ground and lower ground floor space. The initial annual rent of £9.74m represents £75 per sq ft on the main office floors. The rent will rise by 2.25% per annum for the first 15 years, at which point there is an upward only open market review. In return, Arup will receive rental incentives equivalent to 33 months’ rent free. After allowing for the impact of indexation, the average rent over the first five years is in line with our June and December 2016 ERVs. Arup also has an option to take the 40,700 sq ft fourth floor.
John Burns, Chief Executive Officer of Derwent London, said:
“We are delighted to continue our long standing and close relationship with Arup in this mutually beneficial transaction. We have been able to facilitate the upgrade of Arup’s London headquarters and Arup will be the first occupier anchoring our major 80 Charlotte Street development. This complex transaction further de-risks Derwent London’s development programme, and is evidence of our asset management and letting skills, the desirability of our product and the advantage of owning a cluster of property in an attractive location.”
David Whittleton, Deputy Chair and Group COO of Arup Group, commented:
“This innovative deal offers real benefits to both Derwent and Arup, and was possible because of the strong and trusting relationship developed between our firms over many years. Arup is very pleased to have been able to secure its London future in quality space in the rapidly improving Fitzrovia area, where the firm has been based since inception, at attractive and predictable costs. We look forward to many more collaborations in the years ahead.”
JLL, Pilcher Hershman and CBRE acted for Derwent London. Strutt & Parker acted for Arup.