Firm’s campus operation such as Broadgate and Paddington developments will be more than half its business
With bricks and mortar retail under the cosh, developer British Land said it plans to cut its exposure to the sector to around a third of its portfolio and press on with plans to become a mixed-use specialist.
The group, which earlier this year announced it planned to build 3,000 homes at its Canada Water development in south London, said it would reduce its retail assets from 41% of its portfolio to between 30% and 35% in the medium term after posting a thumping £404m pre-tax loss for the six months the end of September.
The listed developer, currently believed to be lining up either Mace or Skanska to start work next year on its £300m redevelopment of the historic Norton Folgate site in the City of London, said the retail sector remained tough, with several occupiers going bust or looking to strike cheaper rent deals.
But chief executive Chris Grigg painted a more positive picture for London’s office market, where demand for quality office space was putting pressure on supply.
Grigg was also upbeat about prospects for British Land’s campus operation, which will eventually make up around 60% of its portfolio.
The operation houses 80% of the group’s offices, across Broadgate – including the 520,000ft² 100 Liverpool Street site being completed by Sir Robert McAlpine – Paddington and Regent’s Place.
And Grigg said the group’s flexible workspace brand Storey, launched in April, was proving “highly successful at attracting new and different types of occupiers to our buildings”.
British Land was given planning for its £3.3bn Canada Water scheme last month.
The development (pictured) will eventually feature 3,000 homes across the 5mft² site. Because of its size, London mayor Sadiq Khan will have the final say on whether it will go ahead
Grigg said the developer was eyeing a start on site by the middle of next year and last month British Land told Building it will appoint the first contractors in the first half of next year.
The first three buildings in the development include a 35-storey mixed-use tower, designed by Allies and Morrison.
Southwark council will beco the site’s lessor, owning 20% of the development, with British Land owning the rest.