All aboard: The regeneration of King’s Cross has attracted high-ranking tenants, higher rents and heralds a new era for its train stations
When the first Eurostar train left the newly restored St Pancras International for France in November, it heralded not only the start of an era of quick journeys to the Continent, but also a milestone in the regeneration of the King’s Cross area.
Redevelopment projects have come and gone, but developer Argent, with its £2bn King’s Cross Central, and fellow landowners including Parbola Land seem to be succeeding where others have failed.
The Guardian Media Group, Sainsbury’s and University of Arts London are among the major tenants to sign up for large chunks of space, but St Pancras International, with Europe’s longest champagne bar, has added a glitzier kudos to the area.
Robert Evans, director at Argent, says: “A lot of people have travelled through and can see what is changing, and that has caused a realignment of expectations.”
Among those expectations are those of agents looking towards higher office rental levels – ones slightly reduced only by the possibility of regeneration at neighbouring Euston station.
Ralph Pearson, partner at Cluttons, says that Argent’s deals have taken the King’s Cross area to the next level of regeneration. “First, you need to get critical mass with a major deal, and this happened with Sainsbury’s,” he says. “Argent is now at the second stage, where it can juggle tenants and see how far it wants to push rents.”
While Argent and Sainsbury’s refuse to discuss the rent agreed, it is understood the supermarket giant is paying around £36 per sq ft.
The figure is a considerable cut on the mid-£40 per sq ft deals achieved at Parabola’s King’s Place, and at LaSalle Investment Management’s and P&O’s Regent Quarter recently. However, a discount was no doubt felt to be worth it to secure a first major tenant.
The next wave of rents is expected to push closer to the £47.50 per sq ft Network Rail agreed to pay at King’s Place at the end of last year.
“There is no reason why the area should not soon see rents of £50-plus per sq ft,” says Pearson. “The fact is, King’s Cross is the sexiest piece of kit around in terms of London regeneration schemes.”
Stephen Peers, head of West End agency at Drivers Jonas, is advising two private family trusts on the only large office schemes set to come forward before King’s Cross Central is delivered in 2011 – Lynton House, an 88,000 sq ft office redevelopment on Tavistock Square, WC1, which will be available from May, and 210 Pentonville Road, N1, an 82,000 sq ft office development due for occupation in July 2009.
“Our advice to our clients has been get your skates on to meet demand before the other schemes come forward,” he says.
Argent’s Evans is by no means losing sleep about the rental tone. “King’s Cross Central will be built through at least one economic cycle, so we are going to see rental growth,” he says. “Nevertheless, we are mindful of rental levels at King’s Place.”
British Land will be worrying too. It will shortly unveil the architectural team and more details about its £1bn regeneration of Euston station, just a short walk west along Euston Road.
Stuart Robinson, executive director at CB Richard Ellis, says that the developments around King’s Cross and Euston are quite different beasts.
“You could say that Euston has been done once before, and is being done for the second time around,” he says. “The challenge is to bridge over Marylebone/Euston Road and allow values to flow across the road.”
Robinson is alluding to Sir Terry Farrell’s masterplan for unlocking the redevelopment of the notorious road by closing the Euston underpass and creating land for a continental-style boulevard.
Evans also dismisses the idea that the area cannot support both projects. He says that Argent and British Land have been working together alongside Camden council on how the schemes might complement one another.
One example of how the two are working together is the plans for a shared combined heat and power plant, he says. “We are talking about opportunities for joining up the projects, for example, by putting down pipework that allows heat loads to be balanced across the area.”
Robinson says that the Farrell masterplan proposes the vital business of “humanising” an area that has the foundations to be the “next big opportunity for London plc”.
“You have the fourth most important university in the world, alongside the British Museum and Library,” he says. “When you consider that London’s ability to compete in the world market will increasingly be based on creativity, there is a great opportunity to engage with institutions.”
What is happening at King’s Cross?
King’s Cross Central Argent’s, London & Continental Railways’ and Exel’s plans for 67 acres around King’s Cross station include 4.5m sq ft of offices, 1,946 flats, 500,000 sq ft of shops and other facilities.
King’s Place Peter Milligan’s cultural complex on York Road in the centre of King’s Cross has consent for 300,000 sq ft of offices, a 425-seat concert hall, rehearsal rooms, a sculpture gallery, a canalside restaurant and a café. The Guardian Media Group signed as its 150,000 sq ft anchor in 2005.
Regent Quarter Agents for the first major scheme to be constructed in the regeneration zone on York Road – LaSalle Investment Management and P&O’s £150m Regent Quarter – have already signed property consultant EC Harris for 66,620 sq ft of offices, Eurostar for the 21,000 sq ft Times House, and online entertainment company Joost for 9,000 sq ft, as well as a number of restaurants and cafés.
St Pancras International The £800m restoration of the famous station includes 82,000 sq ft of shops in five zones.
Somerstown A £500m, 860,000 sq ft medical research complex is being built by a consortium comprising the Medical Research Council, University College London, Cancer Research UK and the Wellcome Trust on a 4.4-acre site behind the British Library on Euston Road.
Euston Station British Land will shortly unveil its architect for the15-acre project, which will include 4.2m sq ft of offices and shops and 2.2m sq ft of mixed-tenure housing.
