Office Space Woes on the Wharf
Knight Frank are an independent property consultancy with offices throughout the world. Office vacancies within the UK capital, London, have been notably on the rise recently. Knight Frank are predicting that last years figures of 4.8% will rise substantially, to around 15%, by the final quarter of 2009.
Songbird Estates PLC own 61% of office space available at the Canary Wharf and over the next five years more than 540,000 sq ft of office space is up for renewal. If those companies decide to relocate elsewhere, it will exacerbate the company’s current financial problems. However, as always in the world of business the flip-side is good for firms offering specialist relocation and office fitout services as they are now in much greater demand as companies look relocate their premises.
Citibank have given the company until May next year to organise repayment of an eight hundred and eight million pound loan which was used to finance Songbird’s huge investment in the Dockland’s office district. The company are seeking the advice of Rothschild and Sons and has begun talks with Citigroup and its shareholders, in the hope to negotiate a solution.
If vacancies rise, rental prices will fall. Bryan Laxton is the chief executive for worldwide investors Cushman & Wakeman. In a recent statement he added more credence to the fact Songbird are set for more future financial problems, stating, “The story in 2009 is the deterioration of rental income”.
With debt already costing above their income, reduced income could mark the end for Songbird Estates PLC. Songbird seem more than aware of the situation, stating only a month ago, current “material uncertainty” could leave the company “unable to realize its assets and discharge its liabilities”. Leaving them incapable of continuing with their “normal course of business”.
