The Government Property Unit has agreed a deal to lease around 400,000 sq ft of office space in Canary Wharf as it moves to bring multiple departments under one roof and cut costs across its estate.
The GPU, advised by BNP Paribas Real Estate, has agreed terms to take the space in 20 Cabot Square, E14 on a sublease from Barclays.
The lion’s share of the space will be taken by Ofgem, the government regulator for the UK’s electricity and gas markets, which last year launched a requirement for 145,000 sq ft in London in a relocation of its 9 Millbank HQ. The requirement was driven by a March 2017 lease expiry on the 144,674 sq ft it occupies at its longstanding Millbank headquarters.
Ofgem’s search cast a wide net over Greater London, prompting speculation that it would follow the trend over recent years of non-ministerial government departments relocating their head office functions away from the most expensive areas of London to more peripheral locations within the capital. The cost of the Ministry of Defence’s main building, for example, costs around £35,000 per person, compared with around £3,000 a year for the Home Office building in Croydon.
It is understood that HMRC is separately looking for a further 350,000 sq ft of office space in London and is already circling Canary Wharf.
Since its inception in 2010, the Government Property Unit, which forms part of the Cabinet Office, has shrunk the central Government estate by more than 2m sq m as civil service numbers have been cut by 17%. That reduction has saved £600m a year in running costs and has brought in a cumulative £1.4bn from the sale of land and buildings.
Barclays, advised on the deal by CBRE, has been in the 558,393 sq ft 20 Cabot Square since 2000 and pays a rent of around £32.50 per sq ft.
Bloomberg reported in March that Barclays was considering leasing space in 10 South Colonnade, also known as 20 Cabot Square, to the government.
A Cabinet Office spokesperson said: "The Government Property Unit is striving to reduce the cost of the Government office estate whilst improving the efficiency of the estate."
"For this reason we regularly receive proposals from the market place which, where relevant, we evaluate. As a policy we do not comment on any commercial negotiations as doing so would not serve the best interest of the public."
BNP Paribas Real Estate and CBRE declined to comment.