The Bank of England has agreed to rent increases that will more than double the amount it pays for its 30,000 sq ft in Leeds city centre.
Bank House, in King Street, was originally built for the Bank of England in the 1960s, and it still occupies the bottom two floors.
Its rent will jump from £105,000 a year to “no less than £232,000” by 2020 after the building’s new owners negotiated a lease extension to 2023.
Palace Capital bought the 88,000 sq ft building in April for £10m and believed it could increase the net yeild generated, from 8.1% to around 10% through “active management” of the building.
One consequence of this strategy has been AXA Insurance vacating its 13.275 sq ft space there, with Palace Capital content to absorb the short-term impact as it seeks “important long term value creation”.
Bank House is one of three -key properties- within Palace Capital’s portfolio. which have been identified as having long-term development or asset management value.
A second is Hudson House in York. and it is seeking planning permission to convert the 103.000 sq ft office building into 82 apartments and 37,000 sq ft of offices.
“At York our plans for conversion of Hudson House led us to grant short tenancies which have now expired,” said Palace Capital chairman Stanley Davis. “The total rental and void rates cost of this has to be weighed against the potential value of this site and makes this a short term price worth paying.”
He added: “Our ambition in the near term is to build critical mass and continue to grow our portfolio of commercial properties located outside London.”