A joint venture between Hines and Korea’s National Pension Services is in pole position to buy a slug of one of the UK’s most famous department stores and convert it into offices.

Hines and NPS have seen off competition from Nuveen and a joint venture of Helical and JP Morgan Asset Management to buy 300K SF of John Lewis’ flagship 650K SF department store on Oxford Street, React News reported.

Hines and NPS are paying around £150M for the portion of the building, React said. The new office could be worth as much as £750M when completed.

In December 2020, Hines and NPS formed a $1.5B joint venture to find and develop "build-to-core" assets, a way for institutions to make better returns by developing buildings rather than buying completed assets at record high prices.

Given the woes of the department store sector, every department store on Oxford Street except Selfridges is currently at some stage of converting retail space to offices in a trend that will see more than 1M SF created in a 500-yard stretch over a span of just two to three years.

John Lewis will hand over the space, between the building’s third and eighth floors, to its preferred developer in about three years.

It will retain 350K SF, about 200K of which will be used for store operations, dramatically shrinking the size of its retail footprint, which currently occupies the basement to fifth floor of the building.

John Lewis is also currently looking at converting parts of its other department stores to build-to-rent residential.