Ted Baker on the move to new HQ as commercial rents plummet
In a surprise move, Ted Baker announced on Friday that it’s moving to a new London HQ. The company will resettle in the heart of Fitzrovia, with the new home costing it much less than the existing global head office it has operated from for over 20 years.
It said the new HQ, which will be called the Gorgeous Brown Building (GBB), “is a fitting home for the brand with its distinctive flatiron shape and epic ceiling heights. This will inspire Ted's creativity in a flexible workspace configured for collaboration in a beautiful new working environment for the team”.
The firm had struck a sale-and-leaseback deal only last year for its current HQ in NW1, selling it for £78.75 million and taking on a short-term lease until 31 March 2023. Known as the 'Ugly Brown Building’, it was bought by the company when it was riding high in 2015 but was sold last year to raise cash, with the firm then leasing it back.
But under the new 10-year lease agreement for the GBB with the landlord, Westminster City Council, it has secured 30,000 sq ft of net space at a cost of £30.33 per sq ft. That means it will pay only £0.9 million in annual rent compared to the current £3.25 million (and up to £4.2 million in relation to the option to lease for Block A of the Tribeca development in Kings Cross).
These savings are separate to the fixed rent cost saving target of 15% for financial year 2022 that Ted Baker announced with its preliminary results on 14 June.
The company said that “the commercial property market landscape has changed dramatically” since it struck the original sale-and-leaseback deal and that “the group has taken advantage of this and agreed a more commercially attractive deal for a prime central London office, allowing the option on Block A to lapse”.
It’s certainly and understandable move given that over the first five years of the GBB lease, the aggregate cashflow benefit of the new HQ is in excess of £13 million compared to what it would have spent including the lease on Block A.
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