US-based investment giant Blackstone has snapped up an office property in Midtown, London, for a reported £90 million while plans are underway for an £80m project to create serviced offices in West London.
The funding corporation, which has its head office on Park Avenue in New York, has acquired Lacon House on Theobalds Road as part of a wider London office “spending spree“, according to PropertyWeek.com. It is reported that Blackstone is buying this latest office property as part of its current investment strategy to acquire under-performing or ‘at risk‘ London offices, before boosting their potential through refurbishment and management processes.
Just over 50% of the 215,000 sq. ft. Lacon House is currently leased to US law firm Nabarro, but the company is expected to vacate the property in 2014 which will leave it significantly under occupied – hence the associated “risk” factor.
However, Blackstone claims that demand is currently strong in Midtown, partly due to occupiers such as law firms that are heading out of the more expensive West End offices in search of lower rental values.
Blackstone, which co-owns London City’s Broadgate Estate, is no stranger to taking risks. It has recently given the go-ahead for an £80m scheme at Chiswick Park to create new serviced offices in West London, and is set to build the final – and largest – property at one of Britain’s biggest business parks even before it has secured a tenant.
The move is said to be a “calculated risk” according to Ken Caplan, head of real estate for Blackstone in Europe: “We continue to see extremely strong demand for space at Chiswick Park both from existing and potential new tenants,” he said, according to The Telegraph. “This has given us the confidence to launch Building 7 and so complete the Park.”
Rob Madden of property agency CBRE said that despite the tough market, they have seen “an awful lot of demand” for serviced offices in West London, particularly from oil and gas companies. Technology, media and telecoms firms are also driving high levels of demand for office space outside of Central London.
Upon completion, Chiswick Park will provide around 1.8m sq. ft. of serviced offices in West London, with Building 7 – the final piece in the puzzle – providing around 334,000 sq. ft. of space for approximately 3,000 office workers.
Blackstone bought Chiswick Park in 2011 for £480m, and the complex is currently thought to be worth around £800m. The company said that 2012 was its “best year yet” as a listed company, citing its economic net income, which reportedly increased by 43% to $670m last year. Outside of its New York head office, the company has additional locations in the U.S. and regional offices in London, Paris, Düsseldorf, Sydney, Tokyo, Hong Kong, Beijing, Shanghai, Mumbai and Dubai.
Find out more about flexible office space in Midtown, serviced offices in West London or any other London location online at LondonOffices.com.
(Image by King… via Flickr.)