Citadel Expands London Office Amid Work-From-Home Concerns

Ken Griffin’s Citadel has agreed to dramatically increase its London office space by moving into British Land’s new flagship City tower, part of a joint venture with Singapore’s GIC at Broadgate. The deal, which will mark a two-thirds expansion of Citadel’s London office space, reflects concerns about how hybrid or working-from-home practices can impact a company’s culture. The move comes as British Land is exploring bringing in another investor in the joint venture, and the London office market is witnessing divided competition for the best quality space. The lease runs for 15 years, with the option to increase space by up to 130,000 sq ft, and analysts estimate Citadel’s headline rent to be £98 per sq ft.

Key Takeaways

• Citadel's London office is set to dramatically increase, occupying a third of the space at 2 Finsbury Avenue, marking a two-thirds expansion in London office space.
• Citadel's concerns about hybrid and working-from-home practices potentially affecting company culture prompted their decision to expand office space.
• Citadel made a record $16bn profit in 2022 and manages roughly $61bn, while its sister firm, Citadel Securities, is one of the world’s largest market-making firms.
• The deal with Citadel delivers a much-needed boost to the Broadgate project, while the London office market is facing rising vacancy rates.
• The lease runs for 15 years with an option to increase space by up to 130,000 sq ft, with Citadel's headline rent estimated at £98 per sq ft, marking a significant increase.

Analysis

Citadel's decision to significantly increase its London office space reflects concerns about the impact of remote working on company culture. This expansion also serves as a strategic response to successful financial performance, as Citadel reported a record profit in 2022. The move is expected to provide a positive boost for the Broadgate project and the London office market. The joint venture with Singapore's GIC at Broadgate is indicative of the competitive dynamics in the London office market, with rising vacancy rates. The long-term consequence could indicate a buoyant office market, while the short-term consequences might entail increase in rental prices and demand for prime office spaces in London.

Did You Know?

• Headline Rent: The headline rent refers to the basic rent charged for a commercial space, usually calculated per square foot. In this case, Citadel's headline rent for their London office space is estimated to be £98 per square foot.

• Broadgate Project: The Broadgate project is a joint venture between British Land and Singapore’s GIC, aimed at creating a flagship City tower in London. Citadel's agreement to increase its office space at Broadgate provides a significant boost to this project.

• Vacancy Rates in London Office Market: The London office market is experiencing rising vacancy rates, indicating an increase in unoccupied office spaces. This trend can have various implications for the real estate and business landscapes in the city.