From 2014 to 2016 many lease agreements will expire leading to some tenants relocating, which may create some economic instability.
This 3 year window of turmoil is due to the fact that there was a significant boom of 25 year and 15 year leases in the 1980’s and 1990’s. As a result 2014, 2015 and 2016 marks the end of many of these leases.
Therefore it is crucial to secure tenants for this period, otherwise properties will become vacant and landlords may become financially unstable.
Statistics suggests that by 2014 approximately 3.5 million square feet of office space will reach a “lease event”, with figures slowly declining for 2015 and 2016.
This means that tenants need to plan for the future and explore other options, otherwise they may be stuck with the out of date offices that they currently occupy.
Mark Bourne, head of a London office agency, said, “In terms of giving yourself the best choice, occupiers should be engaging now.”
Some companies have already come to the end of their lease and have subsequently relocated to new office space. These include BlackRock and Clyde & Co.
Similarly Schroders’ has already hired Knight Frank estate agents to find 250,000 sq-ft of office space, although their lease does not expire until 2015.
UBS are also taking an active interest in their office space options, because their lease on the Broadgate tower is set to expire in September 2014.
It therefore seems that with so many tenants relocating, that by 2015 the City may look significantly different than it is today.