BlackRock lease shows 'commercial property is recovering'

A major 25-year commercial property lease deal, signed by fund management firm BlackRock, shows that the market may be starting to recover.

The incentivised lease will see the firm occupying 292,418 sq ft of retail space in London's Drapers Gardens.

In October last year, it was reported that Australian firm Macquarie had agreed to lease the Drapers Garden space, but, according to the Daily Telegraph, the firm has been gazumped by BlackRock.

BlackRock appears to have out-bid Macquarie by £6 per sq ft.

A source close to the deal told the paper that the move by BlackRock marks a huge shift in sentiment in the commercial property investment market within the City of London.

Analysts at Cazenove said in an investment note that "BlackRock effectively gazump[ing] Macquarie is an indication of the change in direction of the City office occupational market."

BlackRock has been offered a rent-free period of three years, which Cazenove said was far less that the six-year rent-free period recently negotiated by Japanese bank Nomura.

Last month, a study by Jones Lang LaSalle found that commercial property capital values reached a record high in the final quarter of last year.