Perhaps the world’s most exclusive retirement home is planned in the heart of Westminster.
With the spending review just days, away the project encapsulates the government’s balance sheet challenge: the liability of an aging population and the assets dotted through a bloated public sector estate.
Back in March the government put the Home Office’s headquarters up for sale. The lease at Grenadier House expires in 2015 and the £25m sale to Pegasus Homes appears a shrewd piece of business. At current values, Pegasus could expect £1,500 per sq ft for the 50 flats it plans to build.
The deal will please ministers. The size of the government estate has already been reduced by 15% since 2010 and realising the value of property assets (and cutting the cost of holding them) is a key part of the government’s deficit reduction plan.
Of course, in itself the deal will do little to address the growing care needs of the UK population. But it shows a willingness to conceive innovative solutions on the part of Pegasus’s backers, Oaktree Capital Management. Others should take note. There’s a clear need – and an opportunity – for those who get it right.
DTZ is back in play, with parent UGL expected to announce a long-mooted spin off of the business next week. An IPO in the US is the most likely exit, with up to 12 months of financial separation between now and then. It’s an undeniably exciting opportunity. Just 12 months after the business seemed at death’s door, life continues to be interesting for long-suffering staff. Most will crave stability.
More evidence of a strengthening recovery this week as Land Securities unveiled plans to spec develop its £260m, 379,000 sq ft scheme at 1 & 2 New Ludgate, EC4. Completion is scheduled for April 2015. It will need a nickname. I invited suggestions on Twitter. Some were plausible (the Caterpillar), others unpleasant (the Kidney Dish). The Wave was nice but the Boomerang would invite unhelpful comments as the economy ebbs and flows. I liked the Comma (or perhaps the Apostrophe). But, for me, the Jelly Bean edges it. For that we have @David_Soper to thank.
Speaking of new buildings, at the topping-out ceremony for the Cheesegrater this week neither British Land’s Chris Grigg nor Oxford Properties’ Blake Hutcheson let the champagne or the rarefied air get to them. Both reminded their office teams and appointed agents among the 400 or so assembled luminaries that the hard work lay ahead. “We’re only half let,” was the message.
And while it’s a fine building with a hard-to-beat location for the insurance industry, the fact that the nearby Walkie Talkie is also nearing completion means the area is very well provided for in terms of new office space. Too well provided for? Hopefully not.
Meanwhile a visit to Savills’ new HQ this week impressed. The swanky office off Cavendish Square, W1, boasts an impressive reception, an enticing café and genuinely impressive client suite on the top floor. All in all it felt more like the HQ of an investment bank or upmarket asset manager. Which can’t be a coincidence as investment agents seek to regain ground ceded to this sector in recent years.
Most property company chief executives are undeniably well paid. Are they overpaid? That’s arguable. The average FTSE100 chief executive package is £3.9m. The average REIT boss earns £1.9m, though not all are in the FTSE100, of course. Only Great Portland Estates’ Toby Courtauld has earned more than £3.9m. Given that the GPE share price has shot up from under 400p to over 550p during the past 12 months, shareholders will be entitled to feel he is worth his £4.5m.
Damian.Wild@estatesgazette.com
