London office market still has room for winners
Courtesy of Cain International
Cain International has provided £86m to fund the development of Edenica, New Fetter Lane, London
Parts of the London office rental market are still seeing big deals, even as the investment market stutters.
Overheated price expectations in the London office market may have prompted Norges Bank Investment Management to cancel the £720m sale of 585K SF 2 King Edward Street, but the same incendiary conditions sparked 400K rentals SF and sparked another £86m funding deal.
It was reported that Norges’ decision to withdraw the sale of 585K SF from Bank of America headquarters came after bidders failed to meet expectations. The asking price reflected a yield of 4%.
Although the central London market cooled, it did not freeze. On the same day, Cain International agreed an £86m development loan with BauMont Real Estate Capital and YardNine to develop a 95K SF office development at 100 Fetter Lane in the tech-heavy neighborhood of Farringdon. The project – named Edenica – is described as super sustainable.
The 12-story development will have an 8K SF rooftop garden and ground floor garden and aims for the highest environmental standards of BREEAM Outstanding, WiredScore, SmartScore and WELL certifications. Construction is expected to be completed in the summer of 2024.
Cain, like many others, is betting that the greenest office developments have the best chance of a long profitable rental life.
BauMont was advised by BCLP and Cain International by Taylor Wessing, Savills and CBRE.
On the same day the debt deal was announced, it was confirmed that 100% of Sellar’s Paddington Square office space had been leased, following 350K SF deals with Capital Group, DS Smith and Kingfisher .
Sellar, on behalf of owners Great Western Developments Limited, said the high-spec program was calling the market right during the pandemic and reaping the rewards now.
“To be able to announce that the entire 350,000 square feet of office space in Paddington Square has been let, ahead of practical completion later this year, is a testament to the quality of the building and its ability to meet occupant demands. for a future-proof workplace, served by multiple transport options, including the recently opened Elizabeth Line station in Paddington,” said Sellar Managing Director James Sellar.
The first occupants would move in before the practical completion of the program this fall.
Global investment manager Capital Group will double its floor space to over 220K SF as part of a relocation from Victoria. Its suite includes a state-of-the-art 150-seat auditorium, versatile event space, and media studio capabilities. The workspace will accommodate a projected increase in staff over the next 10 years.
Paddington Square is a development carried out by Sellar on behalf of Great Western Developments Ltd, a joint venture between Hotel Properties Limited and Anchorage View Pte. ltd.
GWD was advised by JLL and Knight Frank. Edward Charles & Partners represented Capital Group. Cushman & Wakefield acted for DS Smith and Kingfisher.
In a significant but smaller move, two newspapers owned by Alexander Lebedev will move from Northcliffe House, Kensington, to Indonesian investor Sinarmas Lands’ 220K SF Alphabeta building in Finsbury Square. The Independent and Evening Standard are moving after 34 years of sharing the Kensington building with Associated Newspapers, owners of the Daily Mail, Property week reported. JLL has been quoting rents of £47 per SF on suites up to 19K SF.