PATERNOSTER HUNT FOR BACKERS AFTER PRE-LETTING FLOP

AN exhaustive eight-month search has failed to produce a single pre-let tenant for any of the three cornerstone buildings at Paternoster Square, the controversial office development next to St Paul's Cathedral in the City.

As a result the Japanese owners have decided to seek investors willing to fund the building of unlet office blocks to kick-start the construction phase of the development. Despite its proximity to the cathedral and a host of inducements on offer such as

rent freezes and specially modified interior specifications, letting agent CB Hillier has yet to hook a tenant willing to pay the 57.50 a square foot asking rent.

Hillier director Nick Baucher was reported in June to have already approached every major player in the City including all the tenants of Broadgate, behind Liverpool Street station.

The major problem is size. As a result of planning restrictions the proposed buildings are quite small for the City. The biggest, King Edward Court, is 204,000 square feet, St Martin's is only 102,000 square feet, while Warwick Court is 187,000.

Even together, the buildings would not be big enough to provide headquarters for a major City player. Clifford Chance, the City law firm, recently agreed a pre-let for 700,000 square feet at Canary Wharf.

Although demolition of the ugly Sixties precinct on the site began in 1999 and construction of the core infrastructure work has started, Paternoster Associates' original plan was to find tenants

before building the three main courts. Instead, it has appointed property agents Healy & Baker to find upfront investors for St Martin's.

Paternoster, which is owned by Japanese group Mitsubishi Estates, says it will continue to seek pre-let tenants for St Martin's and the two other buildings, and stresses it is not getting cold feet.

"Our commitment to the redevelopment of Paternoster Square, which is amply demonstrated by the current level of building activity, remains 100%," said a spokesman. Knight Frank partner and property agent Bradley Baker said he was amazed no tenants had turned up. "I am very surprised considering the extraordinarily strong market. Demand is at an all-time high and it is a terrific scheme in a fantastic location."

On the whole, pre-let schemes are much larger, but there are some smaller tenants around.

American arrival Mellon Bank and City law firm Paisner have recently signed up for a 350,000 square foot pre-let at Time Square, just down the road from St Paul's, with Paisner taking only 100,000 square feet.

1940s: Area north of St Paul's Cathedral destroyed by bombing 1956: William Holford produces proposals for redevelopment of the precincts of St Paul's 1961-67: Existing square constructed 1980s- 90s: Various schemes considered as replacement 1993: Paternoster Associates receives planning consent for redevelopment 1997: Sir William Whitfield produces the Paternoster Square masterplan 1998: Masterplan receives planning permission June 1999: Phase 1 demolition begins March 2000: Vacant possession issues are resolved. Phase 2 demolition is started April 2000: Search is launched for a tenant.

Copyright 2000
Provided by ProQuest Information and Learning Company. All rights Reserved.