M&G’s 40 Leadenhall bets on amenities to lure workers back

The largest office development to be completed in the City of London this year is 92% let and achieving above-average rents. M&G’s 40 Leadenhall provides yet more evidence of the increasing demand for sustainable, amenity-rich prime offices in the Square Mile and beyond.

M&G had acquired the scheme in 2019 but construction work was halted by the pandemic. The development includes two towers with 14 and 34 floors of prime office space, a total of 905,000 sq ft (84,077 sq m) which can hold 10,000 workers. An existing listed period building has been restored and incorporated in the development.

“We decided to create a building that people would want to be in, giving tenants an incentive to go back to the office,” said Michael Wood, director of fund management, M&G Real Estate. “We are targeting rents of £100/sq ft for the remaining space on the upper floors.” According to Savills, average Grade A rents in the City are £70/sq ft.

The entire period building is dedicated to amenity spaces which include a fitness studio, a 22,500 sq ft (2,090 sq m) treatment and changing area and a wellness suite. In the main covered tree-lined “square” there is a bar and a seating area with a giant screen with rotating digital artworks.

Employees have access to a large, well-stocked library with desks and comfortable chairs for reading, which includes a shelf full of children’s books. Upstairs there is a 30-seat cinema room with reclining seats and a popcorn machine. The building is fully SMART-enabled, allowing tenants to use touchless technology to book spaces at the 200-seat auditorium, two restaurants, 17 outdoor green spaces and terraces and the communal 11th floor rooftop clubhouse. Under the main building there are hundreds of parking spaces for bicycles and large shower and changing facilities for workers before they go to the office.

The building was designed to be green in use, not just in design. It is among the UK’s first buildings to achieve the NABERS certification – an energy efficiency standard that measures how a building is designed to operate and how it performs in use. 40 Leadenhall is also targeting the BREEAM Excellent standard, the WELL Platinum rating and is aspiring to the Platinum Wired and SMART building certifications.

As well as exceeding the Government’s performance benchmarks for Net Zero, carbon emissions will be 40% lower than the Building Regulations’ baseline. Electricity is 100% from renewable sources and water-source heat pumps provide heating and hot water.

The ground floor foyer and central square house around 800 “flutes” which clad the internal walls. Up to 9 metres high, they are formed from surplus steel pipes which have been recycled and cut in half. “They represent craftsmanship and pay homage to the medieval bell founders who were on the original site,” said Wood.

A recent report by Avison Young says take-up in the City of London has increased by 44% in Q3, while another report by Cushman & Wakefield finds that grade A space accounted for over 70% of leasing activity.

The tenant that has taken up the most space at 40 Leadenhall is the US law firm Kirkland & Ellis, which has signed a 17-year lease for 412,000 sq ft (38,276 sq m), allowing plenty of space for each of its 800 employees. As Savills says in its latest London Office Market Watch, “it is a continuation of a trend we have seen whereby law firms have relocated to best-in-class space in order to attract and retain top talent.”