Aon Agrees to Lease Almost a Third of City of London’s Cheesegrater Tower

Aon Corp. (AON) agreed to become the first tenant in the Cheesegrater, a skyscraper in the City of London financial district that’s due to be completed in 2014.

Aon will occupy almost a third of the 47-story tower, according to a statement today from the developers, British Land Co. and Oxford Properties Group Inc. The property, officially known as the Leadenhall Building, will be the Chicago-based insurance broker’s U.K. base.

British Land revived the project in October after getting backing from Oxford Property’s owner, Toronto-based Ontario Municipal Employees Retirement System. Prices for London office buildings have recovered since August 2009 as the weak pound fueled demand from overseas investors and a shortage of large new offices lifted rents.

“This is good news for British Land, but doesn’t signal a jump in demand for central London offices,” said Alan Carter, an analyst at Evolution Securities Ltd. with an “add” rating on the stock.

British Land fell 0.3 percent to 582.5 pence at the close of trading in London. The shares have climbed about 19 percent in the past six months, raising the company’s market value to 5.2 billion pounds ($8.4 billion).

Aon will occupy 191,000 square feet (17,700 square meters) of space in the Cheesegrater and has the option of leasing an additional 85,000 square feet in the building. The tower will have total space of 610,000 square feet and will cost about 340 million pounds to build.

‘Lots of Interest’

“The agreement demonstrates the high level of interest being shown by major occupiers,” for the property, British Land Chief Executive Officer Chris Grigg said in the statement. His London-based company is the U.K.’s second-largest real estate investment trust after Land Securities Group Plc.

Four other skyscrapers are planned for central London. None of the owners have signed up office tenants yet.

British Land and Oxford Properties didn’t say how much rent Aon will pay. The Leadenhall Building is called the Cheesegrater because of its angular shape. The floor space will taper from 21,000 square feet at the base of the building to 6,000 square feet at the top.

To contact the reporters on this story: Simon Packard in London at packard@bloomberg.net; Tom Bill in London at tbill2@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.

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