Aviva Seeks Partner for New City of London Skyscraper Project

Core Viewpoint - Aviva Plc is seeking a partner to fund a new skyscraper project in London's insurance district, betting on a rise in office rents despite current market uncertainties [1][3]. Group 1: Project Details - Aviva's investment management arm has engaged broker Knight Frank to sell a stake in the 130 Fenchurch Street project, which received planning approval in September [2]. - The development will feature over 600,000 square feet (57,500 square meters) of office space, along with a public garden terrace and ground floor retail options [9][10]. - Demolition of the existing building, Fountain House, is expected to complete next year, with the new tower potentially finished by 2030 [10]. Group 2: Market Context - Higher construction costs are making many projects unprofitable unless they achieve significantly higher rents, leading developers to delay new projects [3]. - Companies are hesitant to commit to long-term leases due to rising costs and uncertainties about future space needs, exacerbated by flexible working arrangements and the impact of artificial intelligence [4][5]. - There are indications of accelerating rental inflation, exemplified by Proskauer Rose LLP agreeing to a record rent of £140 ($186.82) per square foot for office space in the City of London [7]. Group 3: Competitive Landscape - BlackRock Inc. is exploring options for a new London headquarters despite having a decade left on its current lease, highlighting the scarcity of available office space [8].