Cornerstone Real Estate Advisers has bought a St James’s office block in an off-market deal to take advantage of expected 20% rental hikes in the SW1 area.
The firm has purchased 7-10 Waterloo Place for £35m from Access Industries.
The 33,000 sq ft office will be vacant in 2015, following which Cornerstone will undertake a grade-A refurbishment to bring the current low passing rent of £55 per sq ft in line with nearby rents of over £100 per sq ft.
Prime St James’s rents stood at £120 per sq ft last year, according to Colliers International. The agent has forecast this will rise by 20.8% to £145 per sq ft by 2018.
The increase will be fuelled by a major regeneration of the area, led by the Crown Estate, and by an undersupply of West End stock.
Nick Pink, chief executive of Cornerstone Europe, said: “We see opportunities to create value in the central London office market and are focusing on submarkets attracting public and private investment, which will improve tenant demand and rental value growth prospects.”
The purchase adds to Cornerstone’s £270m central London office portfolio, which also includes 40 Gracechurch Street, EC3, and Nexus Place, 22-25 Farringdon Street, EC4.
Jonah Sonnenborn, head of real estate at Access Industries, said: “We look forward to redeploying the proceeds in other investments where we can create similar value.”
JLL advised Cornerstone; GM Real Estate represented Access.
