by Nick Mathiason
Hammerson is set to make its first-ever investment in London’s Docklands.
In a double swoop, the UK’s third-largest quoted property company has this week placed two neighbouring buildings – 1 and 2 Harbour Exchange, E14 – under offer at £74m.
Hammerson is acquiring the multilet buildings to take advantage of projected rental growth in Docklands. Mike Geddye, Chesterton’s Docklands specialist, commented: “This deal is without a doubt a vote of confidence in the Docklands area. It is a clear statement from a quoted property company that expectations of rental growth, in view of limited supply, are real.”
Average rents in the buildings, which between them total over 46,450m2 (500,000 sq ft), are around £161 per m2 (£15 per sq ft) but, with breaks due in three years, expectations are that this could climb to well over £215 per m2 (£20 per sq ft).
But one Docklands source warned against overconfidence in the area. “Demand has never been that strong in Docklands. There’s soon going to be another large chunk of supply coming to the market. It only takes a couple of US banks to start laying off staff and theories of rental growth will turn to dust.”
Hammerson has moved quickly to reinvest the proceeds of its recent £238m exit from the Canadian property market to OMERS Realty Corp. The company is known to be scouring Europe for further opportunities.
For the Spanish banking consortium that owns 1 Harbour Exchange, the deal is seen as a triumph. The consortium acquired the investment for just £18m three years ago at a 10% yield and is selling at around its asking price of £32.5m at 7.37%.
Healey & Baker is selling 1 Harbour Exchange while FPDSavills is representing Property Investment Trust Two, the present owners of 2 Harbour Exchange.
