Hedge fund Citadel to expand its London office space with tower move

Unlock the Editor’s Digest for free

Ken Griffin’s Citadel has agreed a ‘‘dramatic increase” of its London office footprint, with a deal to move into British Land’s new flagship City tower.

Hedge fund Citadel and its sister firm, market-maker Citadel Securities, have agreed to pre-let at least 250,000 sq ft, or a third of the space, at 2 Finsbury Avenue.

The building, part of British Land’s joint venture with Singapore’s GIC at Broadgate, is under construction and due to be completed in 2027.

The deal, which will mark a two-thirds expansion of Citadel’s London office space, comes after Griffin has expressed concern about how hybrid or working-from-home practices can hurt a company’s culture. 

“We make so much money because our competition plays in their pyjamas . . . when you have everybody under one roof, information moves much faster between team members who are literally this close to each other,” he said in an interview with a Goldman Sachs executive last year.

Citadel, which manages roughly $61bn, made a record $16bn in profit for investors in 2022, according to research from LCH Investments. Citadel Securities, meanwhile, is one of the world’s largest market-making firms, buying and selling securities.

The two businesses together employed more than 780 people in January at their current offices at 120 London Wall.

The ability to attract Citadel as a tenant delivers a boost to the Broadgate project at a time when British Land is exploring bringing in another investor in the joint venture. Space at Finsbury Avenue — which includes two towers of 21 and 36 stories — has been in demand.

Bhavesh Mistry, British Land’s chief financial officer, said the company estimated that 1mn sq ft of new or refurbished space would be delivered each year from 2024-2027, compared with 2mn sq ft of typical annual demand. 

“We are putting a product into 2027, when there is not much other product coming out,” Mistry said, adding that the deal marked a “‘dramatic increase” in Citadel’s London footprint. 

Morgan Stanley approached British Land about moving into the building but the landlord was already in talks with Citadel, according to people familiar with the matter. The US bank ultimately decided to stay in its current premises in Canary Wharf. Morgan Stanley declined to comment.  

Gerald Beeson, chief operating officer at Citadel, said the “unparalleled building” would benefit “the exceptional talent we attract to our firm as we continue to grow our presence in London”.

The news comes at a time when the London office market is divided between competition among tenants for the best quality space but little demand for older or badly located buildings. London’s office vacancy rate rose to 9.5 per cent at the end of March, the highest in 20 years, according to CoStar data. 

Citadel’s lease runs for 15 years starting when it moves into the building. It has the option to increase its space by up to 130,000 sq ft. JLL advised the firm on its move.

Berenberg analysts estimated Citadel’s headline rent is £98 per sq ft, an increase from previous rents of roughly £70/sq ft in Broadgate, not including an industry-standard rent-free period covering 20 per cent of the lease. British Land declined to comment on the terms. 

Articles You May Like

AfD lead candidate in EU election attacks western ‘paranoia’ on China
UK 2024 election: what to read ahead of the July 4 ballot
Are the US and Chinese economies really about to start ‘decoupling’?
California’s efforts to provide equitable public broadband hit fresh hurdles
These home remodeling projects offer the highest return on investment in history, report finds