GEC and BT spur property prices

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The Independent Online
GEC, the electronics and defence giant, has ignited the central London property market with a pounds 2m-plus deal to move from its long-standing Mayfair headquarters building.

The agreement came as British Telecom was said to be close to securing a deal worth up to pounds 2.5m to take over a new building in Berkeley Square to use as the headquarters for Concert after the merger later this year with MCI. Property experts said the two agreements, the first of their kind in the West End of London for at least a year, had already added more than 10 per cent to office rental prices.

The lease on GEC's existing building, in Stanhope Gate, was due to expire in August 1998 and the building's owner, the National Westminster Bank pension fund, is thought likely to redevelop the site. GEC has occupied the offices, in one of London's most expensive districts around the corner from Park Lane, since the 1960s. Its sparsely decorated interior, in marked contrast to most other leading company headquarters, came to symbolise the tough cost control of Lord Weinstock, GEC's long-serving former managing director. GEC's new management, led by George Simpson, is to move to a refurbished office nearby, on the corner of Bond Street.

Property sources suggested GEC had paid more than pounds 45 per square foot for the lease on the 44,000 sq ft building. Keith Williams of Jones Lang Wootton, the commercial property agents handling the deal, said: "It's under offer so terms have been agreed. We expect to complete the legal paperwork in about three months."

BT said it had not yet agreed terms on the Berkeley Square building, one of the largest new developments in the exclusive part of London since the recession, and denied suggestions that it was paying in excess of pounds 50 per sq ft for 48,000 square feet of office space. On top of the annual rental fee of up to pounds 2.5m, experts predicted BT could spend as much as pounds 5m fitting the building out.

The move to Berkeley square for a handful of senior Concert staff represents a victory for Sir Peter Bonfield, BT's chief executive, over MCI executives who had wanted a location closer to Heathrow Airport. Most BT employees will stay at the existing headquarters for the UK operations near St Paul's Cathedral.