Transport for London has decided not to sell its iconic headquarters building in London’s St James for a luxury residential redevelopment.
The department will instead remain in 55 Broadway, SW1, and sell the asset as an office investment via a sale–and leaseback arrangement.
The decision will not affect its move to a new 265,000 sq ft office at Lendlease’s International Quarter in Stratford, E15, in 2018.
Graeme Craig, director of commercial development for TfL, said: “Following a detailed review of our property portfolio, we have decided that selling 55 Broadway under a sale-and-leaseback agreement will deliver the best possible value for money. This will mean that we can monetise the capital value of the complex while retaining it as relatively low-cost office space.”
The site was initially earmarked for residential redevelopment in 2013, when values in the prime London central London market were near their peak. It had a sales value of around £250m at the time, and the redevelopment of nearby New Scotland Yard sold for £370m in 2014 to the Abu Dhabi Financial Group.
Since then values in the London prime market have cooled. According to data from LonRes, residential values in Victoria/St James increased by 43% between 2011 and 2014, but since then have declined by 2.2%. The average office value today in the area is £1,398 per sq ft.
The value of the building will be determined largely by the nature of the sale-and-leaseback arrangement with TfL. The empty office could have a value of around £800 per sq ft, valuing the building’s 218,400 sq ft at around £170m. Were TfL to sell that with a 25-year lease, the value would be considerably more.
The decision puts a stop to four years of consultation and planning for a residential sale of the building [see timeline, below]. Planning permission was granted in June 2015 for a conversion into 112 flats.
After mayor Sadiq Khan won the London mayoral election in June 2016, he asked for a review of the sale of all TfL assets, with the intention of including a higher percentage of affordable homes. Under the previous plans, 35 flats in the scheme would have to have been affordable, or 31%.
Timeline for 55 Broadway
April 2013: TfL invites bids from agents for a potential sale of the freehold of the 500,000 sq ft building in 2013, asking them to come up with most financially viable proposals
May 2013: Knight Frank is appointed to advise on the sale, which is expected to take a residential form
August 2013: Architects are asked to pitch on residential conversion, with TfL’s intention to receive planning before a sale
May 2014: TateHindle is appointed to draw up plans
September 2014: Plans are submitted for 89 flats
November 2014: With additions to planning including the extension of the 10th floor and a change at 100 Petit France, the scheme is increased to 124 flats, 35 of which are affordable
April 2015: Planning application goes before committee with recommendation to grant, but a decision is deferred
June 2015: Planning granted for 112 flats, 35 of which are social. An official sales launch is planned.
May 2016: Sadiq Khan is elected London mayor and orders a review into the disposal of TfL land in order to boost affordable housing provision
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