Investors are ploughing into London’s South Bank in search of development stock to take advantage of the severe shortage of new office space in the area.
Angelo Gordon and LaSalle Investment Management have agreed separate off-market deals to buy development opportunities in the area with a view to bringing forward around 300,000 sq ft of new development.
US private equity real estate fund manager Angelo Gordon has secured a deal to buy 42 Southwark Bridge Road, SE1, for more than £50m from M&G Property Portfolio.
The 100,000 sq ft block is let to SunGuard Financial Systems until 2018 and has the potential for a substantial extension or redevelopment.
M&G, which bought the block from Land Securities for £35.9m in 2013, appointed architect Buckley Grey Yeoman last year to design a scheme which would increase the net lettable area by around 45,000 sq ft.
Separately, LaSalle is under offer to buy a £40m site from the Reuben brothers’ Motcomb Estates which was previously earmarked for a 116,000 sq ft office-led redevelopment by Chelsfield.
The fund manager is buying the offshore vehicle which controls Lumina at 135 Park Street and Emerson Studios at 4-8 Emerson Street, SE1.
The consented Chelsfield scheme, plans for which were submitted in 2001, includes 97,015 sq ft of offices, as well as 19,000 sq ft of shops and leisure uses.
Motcomb Estates bought the site in 2009.
LaSalle and Angelo Gordon are among a slew of developers seeking to take advantage of the fact that there is just 672,300 sq ft of available office space in the South Bank area, according to Union Street Partners, and very little in the short-term pipeline.
That compares with average annual take-up of 1.1m sq ft.
Other developers are also working up plans for major office schemes in the area.
GPE told investors last month that it could build as much as 300,000 sq ft of new office space at New City Court at 20 St Thomas Street, SE1, a 1980s office block it bought for £43m nine years ago.
GM Real Estate is advising on 42 Southwark Bridge Road.
