Flex Office Veterans Seek £150M To Take Advantage Of Moment-In-Time Opportunity

Founders of one of London’s largest flexible office companies are looking to raise new equity to build a £300M portfolio at what they say is a great time to buy old offices for transformation into profitable flex locations, Bisnow can reveal. 

Artesian Property Partnership is on the hunt for £100M to £150M of equity to build out a business that already operates locations in the City and Stratford. The equity would be coupled with debt to build a portfolio of six to eight sites.

Artesian partners Mark Breen and Alasdair Grievson were among the founders of flexible office business Argyll. Despite the travails of WeWork, the highest-profile name in the flexible office sector, Breen told Bisnow that now was an opportune moment to buy older offices to turn them into flex locations. 

“Our background is in taking office buildings that are past their sell-by date and repositioning them, and that’s the opportunity today,” he said. “You can buy buildings at large discounts to their value three to four years ago and make sure they provide the services and space that people want. That way you make a capital profit from improving the value and produce higher income than from traditional rack rents.”

Artesian is looking to buy 20K SF to 50K SF buildings within a short walk of public transport hubs. Larger buildings with big floor plates are not well suited to flexible offices, Breen said, because subdividing the space into individual offices is more difficult: Companies don’t want to lease offices in the middle of the floors because they don’t have any natural light. 

Buying buildings specifically to turn them into flex offices puts Artesian at an advantage because the space can be redeveloped with flex use in mind, Breen said.

Its two facilities near Monument in the City and in Stratford, east London, are operated under Artesian’s Us&Co brand and are more than 90% leased, Breen said. They feature members clubs, breakout areas and outside terraces. 

Artesian’s partners founded Argyll in 1998 and built the company up to six business centres, as they were called then, in Mayfair, St. James’s and Belgravia. The sites included 53 Davies Street, once home to the Duke of Westminster and family. 

The business was sold to a company backed by Soros Real Estate Partners in 2004 at a profit of more than 20%. It was later expanded, renamed London Executive Offices, and bought by Morgan Stanley and then Queensgate before being acquired by investment firm Celvam for £475M in 2018. The company went into administration in 2020 after £275M was not repaid. 

It is now backed by Alpine Grove Partners, an investment firm set up by partners at previous owner Soros Real Estate, and has been renamed Argyll. 

Breen said that for the past couple of years or more, it has been difficult to find interest among investors to back an office strategy, particularly those from the U.S. with large legacy office holdings. But things are starting to change, with interest from family offices and property funds in particular, he said. 

Bisnow is holding an event on the London Office Renaissance at Battersea Power Station on 21 March. To join, go here.