Development opportunities created by the Crossrail project in London are moving closer to fruition as Transport for London begins to release the sites above key stations.
Schemes at Bond Street, Tottenham Court Road, Liverpool Street, Paddington and Farringdon are set to get under way next year, with the first section of the Elizabeth Line itself due to start running at the end of 2018.
More than 3m sq ft of office, retail and residential space at 12 developments between Paddington and Woolwich has been created by Crossrail, which is now 85% complete. The developments are expected to generate an income of £500m, which will be used to help fund Crossrail’s massive £14.8bn bill.
Under the Crossrail Act 2008, which allowed Crossrail owner Transport for London to purchase land for the new train line, developers and former site owners were given first refusal to buy it back.
Crossrail over station developments (OSDS)
New Bond Street
Knight Frank is working with Grosvenor Estates on the Bond Street West site, at 354-358 Oxford Street, which has planning approval for 17,000 sq ft of commercial and residential space with an estimated value of £40m. A 6,000 sq ft retail unit for a flagship store is part of the plans, with 11,000 sq ft of residential space for 11 flats over five floors above the store. The development will include a new ticket hall as well. A handover is not expected until the middle of next year, followed by a two-year build.
Great Portland Estates has planning approval for 193,000 sq ft of grade-A office accommodation as part of the Hanover Square Estate development, most of which will sit above the New Bond Street station. GPE, with the help of Deloitte, is expected to receive the Bond Street East site from Crossrail before the end of this year, and to start work in 2018.
A mixed-use development including offices, residential, retail and leisure elements will link Hanover Square with New Bond Street.
- Handover of sites expected: end of 2017 and middle of 2018
- Increase in average office rents for New Bond Street 2009-2016: 68.9%
- Increase in average office rents for West End: 72.3%
Tottenham Court Road
A site above the new station is to be taken over by developer Derwent London this month (September) as a first step towards significant changes in the St Giles area around the new Tottenham Court Road station.
Derwent London signed a 150-year lease agreement with Crossrail on a £400m office and shopping development called Soho Place, W1. The developer is buying back the site at 1 Oxford Street for £55m, with payment due on completion, after giving it up to Crossrail in 2009. Crossrail will receive 5% of the rent on the commercial space, and 16% of any development profit. Knight Frank is advising.
The 275,000 sq ft scheme near Centre Point consists of two buildings with offices, shops and a 350-seat West End theatre. Work is due to start in the second half of next year and finish in 2020.
In the immediate area around Tottenham Court Road station there are several other large developments, including an additional 35,000 sq ft of new restaurants and food space in St Giles, Fitzrovia South, Tottenham Court Road, Bloomsbury and Soho.
- Handover of site expected: this month
- Increase in average office rents for Tottenham Court Road area 2009-2016: 103%
- Increase in average office rents for West End: 72.3%
Farringdon
Above the eastern ticket hall of the new station at Farringdon (pictured top), and opposite Smithfield Market, the Lindsey Street development will consist of three retail units on the ground floor, and five upper floors accommodating 120,000 sq ft of office space. Agreement is currently being negotiated with a number of private individuals and the Corporation of London for them to buy the site back from Crossrail, and handover is expected by January next year. Deloitte is acting as adviser, but developers are yet to be announced.
- Handover of site expected: January 2018
- Increase in average office rents for the Farringdon area 2009-2016: 126.2%
- Increase in average office rents for City fringe: 137.8%
Paddington
The Paddington Triangle development over the station adjacent to Praed Street will consist of a 21-storey office-led tower. Westminster City Council has approved the 397,954 sq ft Grimshaw Architects-designed scheme, which will include shops and an office entrance at canal level.
Approval is subject to a £1m payment to the council in lieu of on-site affordable housing, a £4.5m payment to Crossrail on completion of the development, and £1m towards public realms works.
A developer has yet to be chosen. Cushman & Wakefield is the advisory agent on the scheme.
- Handover of site expected: not known
- Increase in average office rents for Paddington area 2009-2016: 68.6%
- Increase in average office rents for West End: 72.3%
Liverpool Street
Two developments are planned at Liverpool Street in a deal between Crossrail and developer Aviva, with Savills acting as agents. There will be 88,000 sq ft of office space and ground floor retail in a new building next to the Crossrail entrance at Moorgate Station.
A nine-floor office development is planned opposite the eastern entrance to Liverpool Street station, but is still awaiting planning consent.
- Handover of site expected: not known
- Increase in average office rents for Liverpool Street area 2009-2016: 74.3%
- Increase in average office rents for the City: 63.9%
The Crossrail effect
The £14.8bn Crossrail project will reach its destination in the next couple of years. The handover of development sites above the new stations should begin this month, marking a new phase in the development – and an opportunity to look at the predicted “Crossrail effect” on values.
Taking average office rents in the immediate area of five of the central London stations, there has been an 84% increase in value between 2009 and 2016 – this compares with 81% in central London generally.
It is the stations in areas that could legitimately be described as up and coming that seem to have seen the biggest rise in office rental values – Farringdon (126%) and Tottenham Court Road (103%) – but how much of this is attributable to Crossrail is difficult to answer. Paddington, arguably, also has a lot to gain from the connections Crossrail brings and yet rents rose 74% – below the average for the five stations and below the average for the wider submarket.
However, if you draw comparisons with the areas around stations that aren’t on Crossrail, the difference is more stark. The average rental increase between 2009 and 2016 for London Bridge, Waterloo, Charing Cross, Victoria and Russell Square is 67.3%. London Bridge drags the average up but there could be two key reasons for that: investment in the station and Thameslink line and the Shard.
