Hermes Real Estate has turned its back on what was expected to be one of the most prime office developments this cycle by putting it up for sale.
The fund manager had proposed to speculatively develop the 80,000 sq ft scheme on the north-east corner of St James’s Square, SW1, which was due to be completed in 2009.
It signed up Patrick Despard’s City & West End Developments as development partner for the Eric Parry-designed scheme a year ago.
But the fund this week decided to cash in on huge investor appetite for central
A source said: “There is strong demand for this type of development. Hermes has obviously decided to get a good price now, rather than take the risk on the development in return for a bigger profit.
“Legal & General did the same with the sale of Fortress House last year.
“It may also have concerns about how much higher rents in the core can go from existing levels during the next two to three years.”
Hermes has consent for a 70,000 sq ft scheme to replace 8 St James’s Square and 7 Apple Tree Yard, which total 55,000 sq ft.
This will be linked to the 10,000 sq ft Grade II-listed 7 St James’s Square, which will be refurbished.
Jones Lang LaSalle is advising Hermes.
