Chinese buyer of London's Lloyd's Building faces vacancy risk

Tue Jul 9, 2013 7:24am EDT
 
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By Tom Bill and Chris Vellacott

LONDON (Reuters) - The new Chinese owner of the landmark Lloyd's Building in London could face the financial burden of an empty building as the insurance market considers a move out of its high-maintenance home.

Insurer Ping An (601318.SS: Quote) paid 260 million pounds ($388 million) for the Richard Rogers-designed office tower on Monday, but Lloyd's of London Chief Executive Richard Ward told Reuters the structure's striking design came at a cost and Lloyd's wasn't tied to the purpose-built site that bears its name.

Ping An, which has not officially confirmed the purchase, said it did not comment on specific investments.

Commercial property investors run the risk of vacancy as all tenants keep property costs under review. But finding a new occupant for the 14-storey structure would be uniquely difficult.

Completed in 1986, the building's interior is an open-plan atrium designed as an underwriting marketplace and its protected status means there are tight restrictions on conversion or modernization work.

The structure, often referred to as the "inside-out building", has its ducts and lifts on the outside, in similar fashion to the Centre Georges Pompidou in Paris, which Rogers designed with Renzo Piano, the man more recently behind London's Shard skyscraper.

"Of course we'd move. To say never to anything would be absolutely daft," Ward said. "We have breaks in the lease and any sensible person would look at what their options are."

"I can't guarantee you'll get to the ground floor in the lifts because they break down with some frequency," he said. "That's the fundamental problem with this building. Everything is exposed to the elements and that makes it very costly."   Continued...

 
A general view shows the Lloyd's building in London September 26, 2012. REUTERS/Neil Hall