LONDON (Reuters) - The U.S. insurer W.R. Berkley is planning a 40-storey skyscraper in London’s main financial district, underlining the importance of the industry to an area once dominated by banking.
While many investment banks have moved to the Canary Wharf district in recent years, attracted by large trading floors and cheaper rents, insurers have been the only bright spot in an otherwise moribund lettings market in London’s traditional financial district surrounding the Bank of England.
W.R. Berkley, which has bought the land, has appointed architect Kohn Pederson Fox (KPF) to design the building.
“We are in discussions with KPF and the City of London Corporation about a project,” Andrew Reynolds, vice-president of UK property development at W.R. Berkley, told Reuters.
Late last year insurance broker Aon signed a lease for 191,000 square feet in the skyscraper known as the Cheesegrater, while fellow insurer Markel became the first tenant in the “Walkie Talkie” tower, both of which are under construction.
The buildings, being developed by British Land and Land Securities respectively, are located near the Lloyd’s of London building, the focal point for a cluster of insurance companies in the city’s EC3 postcode.
A report this year by property consultant CBRE said that 13 insurance companies were looking for a total of one million square feet of space in London. They include Jardine Lloyd Thompson, which will reportedly move to new offices in the St Botolph building, also in EC3.
“The insurance industry is to some extent counter-cyclical, and that explains what is happening,” said Mat Oakley, director of commercial research at property broker Savills. “It is a sector going through consolidation and expansion, hence the need for new space.”
That many insurers are taking space in new towers is also a reflection of the poor quality of the offices in EC3, Oakley said.
The overall office letting market in central London has been muted as companies put moves on hold because of uncertainty surrounding the euro zone crisis.
The Shard, the European Union’s tallest skyscraper, opened in London last week, though it has yet to announce its first office tenant.
Editing by David Goodman