TfL dumps luxury resi plans for St James HQ

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 To send feedback, e-mail alex.peace@egi.co.uk or tweet @egalexpeace or @estatesgazette