Derwent to build new London block with no pre-lets

LONDON Thu Feb 28, 2013 10:13am GMT

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LONDON (Reuters) - British landlord Derwent London is to start work on a new office site close to London's so-called 'Silicon Roundabout' tech hub, encouraged by appetite for space from expanding technology firms.

The 17-storey, 289,000 square feet complex will house 2,500 workers and be worth 200 million pounds ($303 million) when completed in 2016, said John Burns, chief executive of Derwent whose tenants include Expedia and Publicis.

The decision to start work without a tenant was driven by demand Derwent has been seeing from technology companies for space in the east London belt from Whitechapel to Kings Cross, where Google is developing its new headquarters.

"The area around Silicon Roundabout, Tech City, is doing really well ... you have now got a lot of serious companies looking in that area," Burns said. "There has been considerable success and we think that it is time to build this."

The expanding technology sector and government moves to market the east London area as a home for start-ups has helped Derwent which posted an 11 percent increase in full-year EPRA net asset value - a key industry measure of performance - and said it expected rents to rise 4-6 percent in 2013.

Its move contrasts with other London developers, many of whom are choosing to build only after securing a pre-let agreement because of the gloomy economic outlook and difficult bank lettings market.

Technology and telecom companies rented more new office space in Europe than banking and finance firms for the first time in the first half of last year, property consultancy CBRE Group said in November.

A planned skyscraper at 100 Bishopsgate in London's City financial district is still searching for its first letting to trigger construction and the nearby Pinnacle skyscraper has stalled as a stump in the ground after failing to sign a major tenant amid a legal row between the developer and builder.

The Shard, the European Union's tallest skyscraper which opened to great fanfare in the British capital in July, has yet to sign an office tenant.

Shares in Derwent, which also said it was starting its largest redevelopment project of advertising agency Saatchi & Saatchi's headquarters in the West End, were up 1.9 percent to 2,170 pence at 0955 GMT.

($1 = 0.6608 pound)

(Reporting by Brenda Goh; Editing by Dan Lalor)

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