2 London Offices Worth More Than £1.75B To Start Spec
Two central London offices with a potential end value of more than £1.75B are to start development speculatively, as developers try to take advantage of a historic lack of construction of new London workspace.
A joint venture between Dutch developer Edge and Japanese developer Mitsubishi Estate have secured a £360M construction loan and brought in new equity partners for their 250K SF, £550M redevelopment of 125 Shaftesbury Avenue in the West End.
And Malaysian developer Gamuda and UK investor Castleforge have awarded a construction contract for the development of 75 London Wall in the City, a redevelopment that will create a new 450K SF office that the pair said would be worth around £1.2B.
Edge and Mitsubishi have partnered with a consortium of Japanese equity investors comprising Tokyo Tatemono, Toko Electrical Construction and Fuyo General Lease to fund the EDGE Shaftesbury scheme.
All of the new investors are making their UK debut, and the deal forms part of a slow but steady trend of Japanese institutions buying stakes in either completed UK offices or development projects.
The developers have also secured a £360M development loan from Sumitomo Mitsui Trust Bank. The new equity and construction loan means enabling works for the project will start on site early this year, with completion anticipated in 2028.
Plans for the transformation of the 1980s block were approved by Camden Council in April. The project will increase the building’s height from 11 to 13 floors and aims to reuse 75% of the existing structure to reduce embodied carbon.
JLL advised on both the equity and debt deals.
A few miles west in the City, Gamuda and Castleforge have awarded a £250M contract to Multiplex for the main construction phase of the redevelopment of 75 London Wall, previously known as Winchester House. Enabling works were undertaken by Erith last year.
Construction will now commence on the scheme, which will double the size of the previous building to 450K SF, again utilising much of the existing office’s structure. Completion is scheduled for Q1 2028, with a £500M development loan from Cheyne Capital having been secured last year.
London office construction starts have fallen to their lowest level since 2010, with just 2.5M SF beginning construction from January to October — less than half the previous year's figure and a quarter of pre-2016 levels.
Castleforge founding partner Michael Kovacs and a host of other office luminaries are speaking at Bisnow's UK Office Series: Investment and Development Conference on 26 March. Sign up here.
