Commercial Property Developers Hammerson Speed Up Activity

Pundits doubting the strength of the recovery in the City office market should pause and examine the faster activity from Hammerson, always one of the major developers in the Square Mile. It is now planning to redevelop St Alphage House on London Wall, which had originally been lined up for JP Morgan who subsequently opted for Canary Wharf.

The new plan is for two towers with open space between them. This, said Hammerson, offers the option of developing it in phases. The developer and architect (Make) are discussing their plans with the Barbican Association, who were opposed to the JP Morgan scheme. Apart from this new scheme, Hammerson has been steadily buying major properties. It is paying Union Investment Real Estate £175 million, a yield of 5.75%, for the 24,154 sq.metres (260,000 sq.ft.) 10 Gresham Street, EC2 through its joint venture with the Canadian Pension Plan Investment Board. James Beckham of King Sturge commented: ”Even though the Union is capturing short term gains through the tactical sale of the property, there are opportunities for strong returns from this prime asset.” Hammerson’s David Atkins said: “This acquisition is in line with our strategy to capitalise on attractive opportunities in the London office market.”

Apart from this, the company has also paid the Receiver £65 million for the 10,122 sq.metres (108,955 sq.ft.) Leadenhall Court which is located on the corner of Gracechurch Street and Leadenhall Street. It is certainly an appropriate time to be active in the City with the improving market, as shown by a spate of lettings including the first tenant for Gerald Ronson’s Heron Tower in Bishopsgate, which will be the tallest in the city at 755ft. The law firm McDermott Will & Emery is taking 2,323 sq.metres (25,000 sq.ft.). Tony Joyce of GVA Grimley said: ”We are seeing a lot of deals for Grade A lettings at over £538 a sq.metre (£50 a sq.ft.), a level we did not have until recently. There is a growing shortage of Grade A offices and the reality is that the vacancy rate for them is under 5%. Developers are building again, which means that the City will have the new space to maintain its global position.”

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