Transport for London (TfL) has decided to abandon its plans to move into the Shard at London Bridge upon its completion.
Instead, the group will move some of its staff further out of central London and use the funds towards its efficiency savings programme.
The Shard lease was sold to London Bridge Quarter, a joint landlord venture between the State of Qatar and Sellar Property Group. TfL?s 30-year lease was one of two pre-let deals signed before construction began on the Shard skyscraper.
In anticipation of the widely-reported office space shortage in central London, the owners can now find tenants who will pay a much higher rent than negotiated with TfL. The transport group?s deal, signed in 2006, was set at ?38.50 per square feet.
The Times cites Knight Frank in quoting current prime office rents in London at around ?50 per square foot, up from ?44 per square foot in 2009. It is expected that these rates will continue increasing, up to ?67 per square foot by 2014.
TfL?s withdrawal leaves 200,000 square feet of prime office space that can be re-let for a much higher return on investment. The other pre-let deal was signed with the Shangri-La hotel group, which will remain.
A London Bridge Quarter spokesman said: ?This agreement enables us to position the Shard at the very top end of the London office market. Together, the Shard and London Bridge Place will deliver more than one million square feet of grade A offices located on one of London?s busiest transport hubs in a landmark building of the highest quality.?
