Private equity firms renovate London offices in the wake of Covid

In the wake of Covid, buyout bosses are rethinking the office’s future.

Private equity and venture capital firms have reduced the size of their offices in London, with the average space dropping from 7,087 square feet in 2020 to 4,977 square feet in 2021.

The buyout industry signed 77 office lease deals in the capital in 2021, up from 39 in 2020, according to data from occupier-only real estate consultancy DeVono shared with Private equity news.

“As hybrid work practices are mainstreamed, larger companies are taking the opportunity to streamline their floor space, which for some translates into less space. Contrary to that, small businesses are in growth mode,” said Shaun Dawson, knowledge manager at DeVono.

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The home ground of Mayfair is still the most popular area, but there has been a migration to West End markets such as St James’s and Soho, both of which have seen a net new addition of 4 private equity firms and venture capital.

In one of the biggest deals of the year, Swedish PE giant EQT took nearly 30,000 square feet of office space in Soho.

In the City of London, there was a further negative net movement of four companies less. Similarly, in Docklands, three businesses moved without new entrants.

Victoria, which is currently home to PE stores including Advent International and Charterhouse, has also seen two of the five largest PE/VC office deals, Preqin and Cambridge Associates both taking up space in the area.

Rents and lease terms are both rising, underscoring PE’s appetite for new office developments and Class A space, which accounted for 47% of the annual total.

KKR has signed a deal to occupy space at 1 Medici Courtyard in Mayfair for £128 per square foot on a 15-year lease, the highest rent paid by a VC/PE company last year.

The average rent paid by the industry in 2021 was £79.43 per square foot, 14% higher than the previous year.

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Dawson added, “The workplace is a key part of a talent strategy for venture capital and private equity firms. Delivering the best office ever designed to achieve this is paramount, with the wealthiest companies going all out. »

Internal efforts to develop new office plans come as private equity firms vary in their attitudes towards working from home.

KKR asks employees to return to the office five days a week. Blackstone’s investment professionals are also back full-time, but its non-investment professionals have “more flexibility.”

Meanwhile, both Advent International and Cinven have broadly established a four-day-a-week office policy.

This article was originally published by Financial News’ sister title Private Equity News

To contact the author of this story with comments or news, email Sebastian McCarthy

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