Investors back Reading

A major boost to confidence has come with the arrival of Benson Elliot, a private equity real estate firm, and British developer Stanhope acquiring a majority stake in a massive town centre scheme in Reading. They have bought a majority holding in Sackville Properties’ 157,930 sq.metres (1.7 million sq.ft.) Station Hill scheme. Sackville, which is owned by entrepreneur Sir John Madejski, who has taken the opportunity of a deal in order to pay back debt to Lloyds Banking Group. Sackville will retain a minority stake in the £400 million scheme and a share in the profits.

Having taken on Stanhope as a development partner it was seeking increased financial backing. This deal confirms the view of Reading in a more central role within the Thames Valley for offices; Sackville acquired most of the site from Land Securities in 2005 and was aware it would need a development partner for such a sizeable project. This deal ensures sufficient finance and development muscle. Inevitably, the new owners will rephase the scheme in the light of the Thames Valley market which has been, until now, slow to emerge from the recession. That said, the new owners have shown confidence with Marc Mogull of Benson Elliot saying that Station Hill “will be the new commercial core of Reading. “ He added that “we don’t know what the world will look like in a few years’ time but this is a great piece of dirt given how little space is being delivered in the regional office market.”

The increased role of town centre offices is illustrated with the letting at One Reading Central of 2,097 sq.metres (22,590 sq.ft.) to the software company Pegasystems, where it joins Yell, the international directories business. What is impressive is that the rent agreed through Lambert Smith Hampton for a 10 year lease is £322.80 a sq.metre (£30 a sq.ft.). The development is a joint venture of Kier Property and Invista Real Estate and at 20,252 sq.metres (218,800 sq.ft.) is the largest development in Reading. Kier’s Gillian Scarth said: “Throughout all stages of its development we have acknowledged the top requirements for corporate occupiers of proximity to a mainline railway station and large floor plates being high on the list. Only two floors remain available.” The railway station is being upgraded to handle more trains and help towards faster journey times.