Real estate firms looking to build in the City again as prime office rents start to climb
LAND Securities Group plc, the UK’s largest real estate investment trust, is seeking a joint-venture partner to help it restart development of the City of London skyscraper known as the Walkie-Talkie.
Land Securities, based in the UK capital, has appointed property broker BH2 to find a co-developer for the 155-meter tower, spokesman Donal McCabe said in an interview yesterday. The project at 20 Fenchurch Street in London’s main financial district was shelved in 2008.
Real estate companies in the UK want to build in the City again after competition for a dwindling number of prime offices starts pushing up rents. Most development plans were put on hold in the recession. Some developers will prefer to seek equity partners if they are building towers without tenants.
‘We have begun testing the market for potential partners,’ said Mr McCabe. ‘We have always maintained that we would investigate the possibility of taking on partners as a way of mitigating the risk associated with such a large development.’
Land Securities asked contractors last month to provide estimates for building the Walkie-Talkie, named because of its resemblance to a two-way radio. At the time, the company said the ‘options are open’ on whether it needs to secure a tenant before starting the project.
Rents for the most expensive offices in the City of London climbed in the fourth quarter of 2009 for the first time in three years.
Prices may advance 19 per cent this year as companies try to lease more space in a recovering economy, according to Knight Frank LLP. Tenants signed leases for 204,000 square meters of space in the quarter, which was double the amount of a year earlier.
Tony Gibbon, one of BH2’s founding partners, declined to comment on the project.
Source: Business Times, 20 Mar 2010