What was The Buzz in December?
Our monthly roundup of real estate industry news.
Here are a few of the stories that caught our attention in December. From the approval of the City’s tallest skyscraper, Landsec’s new acquisition to the sale of Lendlease’s construction business, it’s all systems go in the commercial real estate industry.
Tower as tall as The Shard approved for Square Mile
A skyscraper the same height as The Shard has been approved by the City of London Corporation. One Undershaft will be the tallest in the City of London containing 74 storeys, featuring a public garden on the 11th floor and a London Museum education centre.
The building, designed by Eric Parry Architects on behalf of Aroland Holdings Ltd at a height of 309.6m (1015.8ft), will be situated between the Gherkin and the Cheesegrater buildings following demolition of the existing Aviva Tower.
Eric Parry, founder of Eric Parry Architects, added: “Tall buildings can generate huge amounts of value in our cities.
“We’re grateful that the City of London Corporation’s planners and policymakers have worked with us to realise this significant project, which will support the City’s ambitions in the capital.”
Lendlease’s UK construction business to be bought by US private equity giant
The US private equity firm, Atlas Holdings, that owns cladding contractor Permasteelisa is set to buy Lendlease’s UK construction business.
The deal will see Atlas, which bought Permasteelisa in 2020, acquire Lendlease’s construction business and its operations including existing employees and leadership team.
Lendlease group chief executive Tony Lombardo said: “This transaction builds on our progress to simplify Lendlease as we look to lower our risk profile and increase securityholder returns.”
Peter Bacon, Atlas operating partner, said: “We are excited to acquire one of the UK’s leading construction companies, which has a long track record of successfully delivering large complex projects for both private and public sector clients. We look forward to working with [UK managing director] David Cadiot and his team continuing to build the business.”
Regional and London offices touted as top performers in Savills’ 2025 forecast
In commercial property, Savills says that a growing economy should result in business expansion, leading to rising demand for shops, offices, factories and warehouses, although the impact of National Insurance changes on companies’ bottom lines will be felt in the leasing markets. It has therefore revised its take-up forecasts downwards slightly to reflect a more cautious corporate environment in 2025.
However, it says that with the undersupply of prime space in core locations, it does not expect to see development viability improving dramatically in 2025, therefore prime rental growth levels are likely to be sustained at their recent high levels and continue to drive total returns over the next five years. This lack of development activity will also contribute to prime office yields finally hardening in 2025: according to Savills, some investors will remain cautious, either because of legacy issues or concerns about the impact of agile working, but the lure of rental growth and yield hardening will be too much to ignore for others.
Savills says that it predicts that 2025 will also see more institutional interest in retail than over the previous decade, motivated both by the cycle and consumer confidence. Prime shopping centres, retail warehouse parks, and substantial high street parades are all expected to be popular buys next year.
Deepki launches AI-driven tools for real estate decarbonisation
Deepki, an ESG solution platform for real estate, has launched an AI-driven solution to help accelerate the decarbonisation of real estate portfolios.
The tool, designed for commercial real estate owners, investors, and managers, helps them identify and prioritise capital expenditures that enhance asset value and align with net-zero goals.
Oliver Pin, chief product officer at Deepki, highlighted the challenges faced by real estate professionals: “The main stake these days for our customers is to define the most efficient investment strategy that will combine profitability and decarbonisation. They must sometimes do this for very large portfolios and often with a lack of in-house expertise. Leveraging AI-augmented physics models, our investment plan feature performs virtual retrofits and aims to help them make informed, strategic decisions to direct capital flow where it matters most, improving asset value, return on investment and accelerating the path to net zero across the portfolio level.”
Landsec buys majority stake in Liverpool ONE shopping centre for £490m
Landsec announces that it has acquired a 92% stake in Liverpool ONE, one of the premier shopping centres in the UK, from a wholly owned subsidiary of the Abu Dhabi Investment Authority (“ADIA”) (69%) and Grosvenor (23%) for an overall consideration of £490m.
The acquisition is in line with Landsec’s objective to grow its investment in major retail destinations, recycling the proceeds from its £464m of non-core sales earlier in the year. Landsec will now own and manage seven of the top-30 shopping centres in the UK, providing brands and visitors with a unique portfolio of regionally dominant, urban retail and leisure destinations.
Opened in 2008, Liverpool ONE is one of the most modern major retail destinations in the UK, offering a strong mix of retail, food and beverage, and leisure brands that attract footfall of 22 million people per year.
Mark Allan, Chief Executive Officer at Landsec said: “The top 1% of the UK’s shopping destinations provide brands with access to 30% of all in-store retail spend, which is why we continue to see brands focus on fewer, but bigger and better stores in the best locations. As such I am delighted that we have added another top-ten centre with a highly attractive return profile – meaning our unique portfolio now includes seven of the top 30 centres in the UK. Liverpool ONE already has a great line-up of brands in a thriving location and we look forward to building on this with our leading operating platform to further add to its exciting growth story.”
