June 14 (Bloomberg) -- The developer of the Shard, an 80-story tower being built near London’s Thames river, bought out its only office tenant on the prospect that rents will almost double from the agreed rate when the building is finished.
London Bridge Quarter Ltd., a joint venture between developer Sellar Property Group and the Qatar Central Bank, bought Transport for London’s contract to rent 200,000 square feet (18,580 square meters) of space, according to a statement from LBQ today. The building, which is due to be completed in 2012, will have 586,000 square feet of offices.
“It is believed that the Shard’s completion will coincide with a shortage of new high-quality space available to let,” the LBQ statement said. “This agreement enables us to position the Shard at the very top end of the London office market.”
Transport for London, which operates the capital city’s subway and bus systems, agreed in 2006 to pay 38.50 pounds ($56.55) a square foot for the space, it said in a separate statement. Irvine Sellar, Sellar Property’s chairman, said in a January interview that he plans to charge as much as 70 pounds a square foot for the remaining office space.
The developer paid Transport for London a “multimillion-pound” cash sum to annul the lease, Charles Stafford, the government unit’s director of group property and facilities, said in the statement.
The Shard is located near London Bridge Station, half a mile’s walk from the City of London financial district where rents for the best offices climbed to 47.50 pounds a square foot in the first quarter, according to King Sturge Holdings Ltd.
The building will have a total of 920,000 square feet of offices, shops, apartments and a hotel when it’s completed. The developer is also building a smaller property next to the sky-scraper that will have 419,000 square feet of offices.
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