Standard Life has splashed £60m on a pair of South Bank offices that are home to two of the country’s best-known architecture practices.
Allies and Morrison has sold its award-winning 85 and 89 Southwark Street home to Standard Life Investments UK Property Fund for £30.3m, a 4.08% net initial yield.
A 15-year sale and leaseback deal was agreed for the 45,823 sq ft interlinked property, which has been home to the firm since 2003.
Fund manager Nigel Chapman said: “The South Bank is becoming part of core central London. Our acquisition provides the fund’s investors with access to this submarket and a 15-year lease delivering annual rental growth.”
Also in SE1 Ignis Asset Management, a Standard Life Investments company, has paid £30m – a 4.8% yield – for circa 40,000 sq ft 1 America Street.
TP Bennett has a lease on the block until May 2025, with an option for a further reversionary 10-year lease. There are strong rental growth prospects from the current low £41.50 per sq ft.
According to South Bank specialist Union Street Partners, the average headline office rent in the submarket is £57.50 per sq ft and will rise to around £65 per sq ft in 2015.
Julian Hind, partner at Union Street Partners, said: “The South Bank now has a vacancy rate of 3.3%, with the only significant supply being in The Shard. All new-build and refurbished space has now let, with strong headline rents and corresponding net effective rental.”
GM Real Estate acted for Allies and Morrison; JLL acted for Ignis; BNP Paribas Real Estate represented Standard Life on 85 Southwark Street; Kingly Partners advised the private UK vendors of 1 America Street.
