Mining giant Rio Tinto has been forced back to the drawing board after failing to raise interest in a prime West End development site.
The company launched a search in June for a joint venture partner to bring forward the speculative redevelopment of its former London HQ at 5-6 St James’s Square, SW1.
Despite interest from several parties, including Stanhope, Exemplar Properties, British Land and City Offices Real Estate, no bids were tabled before the October deadline.
Rio Tinto is now talking to several of those parties about reformulating the terms of the agreement. It is understood that the original terms of the jv involved Rio Tinto contributing the site, while the developer was expected to fund the project.
One developer said: “We looked at the deal but the terms were onerous and meant that we would have to shoulder all the costs.”
There were also concerns about the mix proposed in the Dixon Jones-designed plans, which comprise 125,000 sq ft of offices, 15 flats, an art gallery and courtyard. Developers are understood to want more residential on the site.
St James’s Square has traditionally been a sought-after West End location. The price of development sites on the square soared to £1,500 per sq ft last year when Achilleas Kallakis’s Pacific Group bought the block neighbouring Rio Tinto’s HQ for £120m for a residential scheme.
It is also a coveted office location, commanding the most expensive rents in the world – £140 per sq ft was achieved at D2 Private’s 12 St James’s Square in September 2007.
Cushman & Wakefield, which is advising Rio Tinto, refused to comment.
* Last week, the takeover of Rio Tinto by rival BHP Billiton was called off. The company is now selling off its assets to pay down its $42bn (£28.7bn) of debt.
