Despite being a year that most in the City’s property market may have preferred to forget, 1992 still saw some exciting activity. Phillip Evamy recalls the main events.
JAN
The year started well with a clutch of newsworthy deals. Maple House Investments paid more than £7m for the freehold of the 56,700-sq ft Maple House in City Road, EC1; First International Property Trust sold Citicape House at Holborn Viaduct, EC1, to Gulf International for about £30m; and Frere Cholmeley signed for 63,000 sq ft at J P Morgan’s 4 John Carpenter Street, EC4, at £25 per sq ft plus a three-year rent-free period.
FEB
Press speculation forced a Stock Exchange spokeswoman to describe its publicised plans to vacate the Stock Exchange Tower and relocate to London’s Docklands as “totally without foundation”. Plans were announced for the refurbishment of the tower’s vacant trading floor for use as office space to accommodate further Stock Exchange departments.
British Aviation Insurance Group became the first tenant to sign for space within Fitzwilliam House at 10 St Mary Axe, EC3. The deal for 26,000 sq ft on the second and third floors of the 85,000-sq ft building involved a rent-free period of nearly two years, at just over £40 per sq ft.
Rosehaugh Stanhope temporarily suspended its John Outram-designed 200 Queen Victoria Street development in EC4 until lettings progressed further on the rest of the 600,000-sq ft Ludgate office scheme.
Legal & General cut asking rents by between 15% and 30% on more than 1m sq ft of its empty office and industrial space in London and the South East. “Cutting the rents was a necessary move to get a tenant in – even if they are not paying rent to start with”, said L&G’s David Ormerod.
Two major acquisitions hit the headlines. London & Manchester Assurance bought back the Finsbury Pavement Island site for nearly £60m less than the price at which it sold it to Land & Property Trust in 1989. And the City Corporation paid £45m for the long leasehold interest of the 1960s 210,000-sq ft St Alphage House on London Wall, EC2.
At the end of the month, plans for Paternoster Square’s redevelopment were called in by Michael Heseltine. The City Corporation welcomed the public inquiry, but privately fumed at what it saw as unwarranted intervention over Paternoster Associates’ neo-classical proposals.”
MAR
London & Paris Properties needed to beware the Ides of March. It fell into voluntary liquidation because of high debt and falling asset values, while Wates City of London Properties’ net asset value of its investment portfolio was written down by 18%.
In contrast to its profit margin in 1990 of £46m, Wimpey Construction Group registered a £16m loss for 1991, with £28m wiped off its City-dominated portfolio of investment properties. Chairman Sir Clifford Chetwood talked of “the worst recession that I can remember”.
APR
On April 10, an IRA bomb explosion near the Commercial Union Building at 1 Undershaft, EC3, damaged more than 100 buildings and resulted in £350m in construction repair costs. As a result, Rosehaugh filled 55,000 sq ft at the Broadgate development, EC2, with homeless companies. A further 75,800 sq ft of short-term lettings in the City were secured from companies displaced by the bombing.
City Corporation’s schedule of development on office space showed a record 3.42m-sq ft swell in completed buildings in the second half of 1991, with further rises expected in the short term. Corporation officials remained calm and stressed the need for “a good supply of floorspace at reasonable prices” to attract tenants.
A number of ambitious new schemes with comprehensive designs were announced or approved. Nat West revealed plans for a £80m mixed-use development on a 1.25-acre site bounded by Threadneedle Street and Old Broad Street, EC2, to bring “life and vitality” to the City’s Bank conservation area.
Designs by Fitzroy Robinson show three new office buildings of 230,000 sq ft, with 20,000 sq ft of shops at ground level. Nat West’s Dave Edmonds said: “The current confused mixture of buildings is beyond economic refurbishment”.
The Richard Rogers-designed new Daiwa HQ building in Wood Street, EC2, was approved by City Corporation and won praise from the Royal Fine Arts Commission for its landscaped stepped terraces and “multiple vertical elements”.
The City Corporation approved Halpern Partnership’s £50m three-year plan to modernise Smithfield Market.
Deals: Korea Development Bank took 4,350 sq ft at British Land’s Plantation House in Fenchurch Street, EC3; Commerzbank of Germany acquired MEPC’s long leasehold interest in the 39,000-sq ft 23 Austin Friars, EC2, for £13m; Aquis Estates sold its freehold interest in the 24,000-sq ft 20 Furnival Street, EC4, to a UK pension fund for £9.5m; the Government took 65,000 sq ft at British Land’s Spring Gardens, Albert Embankment, EC4, at £17 per sq ft and three more signings were announced for refurbished space in the building. “We are dealing with the smaller end of the occupier market and it is here that the first signs of revival in the City office market are being seen,” announced BL’s David Berry.
MAY
At the beginning of May, St Martins Property Corporation’s 250,000-sq ft office redevelopment proposal for 2-14 St Martins Le Grand, 150 Cheapside and 161-162 Cheapside, EC1, won planning consent. The developer said that a start on site is “a long way off”.
Eskmuir Properties paid £15m for its first central London investment – the long leasehold of the 60,000-sq ft Phoenix House in King William Street, EC4; Associated Newspapers took 68,000 sq ft at Carmelite, EC4.
JUN
Fitzroy Robinson’s design for the Royal Exchange, EC3, and Michael Hopkins & Partners’ Bracken House, EC4, jointly won the City Heritage Award for building conservation and refurbishment.
Michael Hopkins ensured that Bracken House, the former Financial Times building, retained its listed north and south facades, while incorporating a seven-storey office block in between with a central atrium.
Knight Frank & Rutley’s City office survey showed that the City registered its lowest level of investment for four years in the first quarter of 1992. Development activity was 60% down for the last quarter of 1991, but the 1.08m-sq ft total of completed space was only marginally down on the previous quarter. Rents are still falling while incentives grow in popularity – “a two-year rent-free period is seen as the minimum”, notes KFR.
Scottish Amicable paid Greycoat £19.1m for the refurbished 46,000-sq ft St Clement’s House in St Clement’s Lane, EC4; Speyhawk and Standard London became the first tenant to sign for the 195,000-sq ft Atrium building at Cannon Bridge, EC4, taking 20,500 sq ft on the fifth floor.
JUL
Paternoster Associates revised its plans for the £800m redevelopment of Paternoster Square, following rejection on 22 counts by the City Corporation in December 1991. More space was given over to open areas and the height and mass of larger buildings was reduced. The masterplan included 837,000 sq ft of offices and 407,000 sq ft of shops, leisure facilities and parking.
Scottish Life paid £12m for Hammerson’s 34,000-sq ft building at 68-71 Fleet Street, EC4; Grant Thornton’s 58,211-sq ft 150 the Minories, EC3, was let to serviced office operator Ouvah Highfield at a rent of £900,000 pa with a nine-month rent-free period.
The London Chamber of Commerce lined up a move to Legal & General Property’s 33 Great Queen Street, EC4, at a rent of £30 per sq ft.
AUG
T P Bennett Partnership’s designs for Nat West’s restoration of 1 Princes Street, EC2, won planning approval. LEP announced a £180m debt-for-equity swap with its bankers, following its post-tax loss of £235m after a £92m investment disposal of US property.
Prudential’s Minster Court in Mincing Lane, EC3, became 80% let, after Japanese Insurers Taisho Marine & Fire signed for 10,100 sq ft on the ninth floor; Clayform Properties sold 143-149 Cannon Street, EC4, to a foreign buyer for about £3m; Midland Bank signed for Kumagai Gumi’s 190,000-sq ft Thames Exchange at Queen Street Place, EC4; Belgian financial institution Kredietbank took 13,500 sq ft on the seventh floor of Rosehaugh’s Exchange House in EC2.
SEP
Chemical Bank abandoned its plans to take 200,000 sq ft at Canary Wharf and instead signed up for 164,000 sq ft at Alban Gate, EC2.
Terms were subject to a confidentiality clause, but City sources suggested a rent of under £30 per sq ft and a rent-free period in excess of three years.
Gertler Properties paid BP £37m for freehold of the Pentagon at 48 Chiswell Street, EC1.
Century Life took 57,000 sq ft at 5 Old Bailey, EC4, at a rent of £27.50 with what were reported to be “substantial incentives”.
OCT
October saw approval at last for Paternoster Associates’ redevelopment plans for Paternoster Square, EC4, by 17 votes to one.
GT Management took 24,000 sq ft on the 14th floor at Alban Gate, EC2; Scottish Widows paid MEPC £2.17m for the 26,000-sq ft partly refurbished Lowndes House, EC3; Greycoat announced the sale of 62 Cornhill, EC3, to headleaseholder Halifax Building Society for £19m; Sanwa Bank took 70,000 sq ft at City Place House, 55 Basinghall Street, EC2; German fund DIFA paid £75m for the Bank of Tokyo building at 12-15 Finsbury Circus, EC2.
NOV
Fitzroy Robinson’s 25-51 St Mary Axe, EC3, won consent for extensive rebuilding, following structural damage from the April bomb blast.
Two large office schemes are given the go-ahead, but put on hold. Nat West’s 171,000-sq ft redevelopment of 21 Lombard street, EC3, won consent from the City Corporation, but a start will not be made “until the time is right”.
Stanhope and Barclays’ redevelopment of 16-17 Old Bailey, EC4, also won approval, but there are no plans to continue work.
A sign of the times: the deal for 37,000 sq ft at New Broad Street house, New Broad Street, EC2, between lessor Norwich Union and stockbroker Panmure Gordon involved a rent-free period of three years, together with an undisclosed capital contribution.
UBS Philips & Drew is reported to be in advanced discussions with Rosehaugh Stanhope Developments to buy the 390,000-sq ft phase three of Broadgate for up to £160m.
