FT Riverside annexe a bridge too far

PEARSON may be forced to sublet the building once earmarked for its internet operation at a vastly reduced rent. The lease for Riverside House was snapped up by Pearson, publisher of the Financial Times, in 2000 at an estimated £37 per square foot to provide growing room for FT.com as well as other FT businesses.

But the 160,000 square foot office block opposite the FT headquarters at 1 Southwark Bridge is now surplus to requirements and agents Cushman Wakefield, Healey & Baker yesterday launched it on the open market.

An FT spokeswoman denied that the building, which would have had room for 900 people, was not needed as a result of sweeping job cuts, although she admitted the headcount has been reduced by 300 in the past year.

She said: 'We are not going to occupy it because the business structure has changed. We've integrated FT.com into the Financial Times and everyone can now fit into our main building on Southwark Bridge.'

At £37 per square foot, the annual rent for Riverside House is just short of £6m. Pearson may have to accept much less than that to find an occupier. Although an FT spokesman said that 'strong levels of interest' had already been registered for the building, vacancy rates in the City are creeping up to 10% and tenants are calling the shots.

Pearson is estimated to have sunk about £250m into FT Group internet operations including £150m into FT.com. The website, which Pearson likes to spin as 'the fourth edition of the paper', is expected to breakeven by the end of this year - but the group has been forced to make drastic cuts to make up for the advertising downturn.

In the first half of the year operating profits for the flagship newspaper fell by 78% to £7m due to a 31% drop in advertising revenues.

To save money, Pearson chief executive Dame Majorie Scardino has closed the Saturday magazine and started charging internet subscription fees, as well as cutting jobs and imposing a recruitment freeze.

At the beginning of the year Scardino tried to sell the newspaper's magazine arm, FT Business, but abandoned the idea in the spring after it failed to attract a high enough price.