Blackstone In Talks To Buy First London Office In 6 Years

Blackstone is in talks to buy a City of London office building for £330M in what would be its first London office purchase since 2019.

Blackstone has made an offer to Nuveen of £330M for 70 St Mary Axe in the City, Bloomberg reported. That is more than the £322M asking price. 

Blackstone is betting that low levels of construction for new Grade A offices will push up rents on the best buildings, Bloomberg said. 

Prime City office rents rose 7.5% to £98.60 per SF in 2024, data from Savills showed. British Land CEO Simon Carter told Bisnow’s CEO Outlook event in January that the firm was preletting space in new buildings at its Broadgate office campus at £115 per SF. 

Blackstone has not been a major buyer of offices for the last decade, and in the last few years, it has consistently referenced how the sector makes up only 2% of the real estate portfolio it manages, the largest in the world. 

Its last pure office purchase in London was Chancery House, which it bought in 2019 through its Office Group flexible office platform and refurbished. 

But in January, Blackstone President Jon Gray said the market for the best-quality and best-located office buildings had bottomed. In New York, the firm is reportedly close to agreeing to buy the 1.9M SF 1345 Avenue of the Americas in Midtown Manhattan. 

The office at 70 St Mary Axe, known as the Can of Ham because of its distinctive shape, was completed in 2019 and cost £135M to build. The 21-storey tower totals 301K SF and is fully leased, with rent reviews offering the chance of rental uplifts. 

A price of £330M would equate to a yield of about 6%. The building was put up for sale for £400M in 2022, but Nuveen pulled it from sale last year when bids didn’t top £300M. 

A deal would make the Can of Ham the largest office in London to trade for the past few years. With sales totalling just £6.4B, last year was the worst for London office investment this century, according to MSCI data.