British Land has bought the majority of the Paddington Central estate in London’s West End, a move which underlines widespread confidence in the potential of Crossrail to generate rental growth.
The property group has invested £470 million to acquire assets comprising 610,000 sq ft of office space, 435,000 sq ft with development potential (including 355,000 sq ft of consented office development) and a further 80,000 sq ft which reverts to British Land in 2018.
The acquisition is in line with British Land’s strategy of expanding its London and South East office portfolio which now accounts for 57 per cent of the company’s overall property portfolio.
Paddington Central is in close proximity to Paddington Station and is well positioned to benefit from the opening of the new Hammersmith and City line in 2014 and the arrival of Crossrail in 2018.
Chris Grigg, Chief Executive of British Land, said he was delighted with the acquisition while Head of Offices Tim Roberts added that managing and developing large London estates is something the company does well.
“With the benefit of improving local infrastructure, the regeneration of Paddington as a whole, plus our ability to improve and complete the estate, I am confident we can take Paddington Central to the next level and in the process, deliver attractive returns,” he said.
The existing properties are 91 per cent let and will generate contracted rents of £25 million when agreed incentives expire. In addition British Land is confident of maximising its returns through asset management.
Current rents average at £49.50 per sq ft, making the prospects for growth very good even in the short term. In the longer term, excellent transport links, together with the wider regeneration of the area, are sure to make Paddington Central a lucrative asset.
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