British Land still ‘talking to partners’ about investing in £600m Euston Tower

British Land has said it is still talking to several investors about teaming up on its scheme to revamp Euston Tower which is set to cost £600m.

Mace won the deal in March, with the work set to be one of the biggest building projects in London in the coming years. The existing 31-storey block was built in 1970 but has been empty for more than three years with British Land looking at creating 566,000sq ft of office and innovation space.

British Land has formed joint ventures on several of its schemes before including 2 Finsbury Avenue, being built by Sir Robert McAlpine, where it holds a 25% stake with 50% held by Abu Dhabi-based Modon. The remainder is held by Singapore firm GIC.

British Land told Building “it was discussing with a range of partners the opportunity at Euston Tower”.

It added: “In the meantime, we are continuing with preparatory services and diversion works in line with the current programme.”

Euston Tower is one of several mega schemes planned for the capital in the coming years, including 1 Undershaft and the Hines jobs at 18 Blackfriars – which is now several months behind schedule with main contract award having been initially slated by the developer for the recent summer.

In its half year results earlier this week, British Land said the earliest start date for two of its other London schemes – 1 Appold Street and West One – would be spring next year.

Skanska has been lined up for the £220m 1 Appold Street City office since last summer while McLaren won the £75m West One job, to redevelop a shopping centre on Oxford Street, earlier this year.

London’s commercial market is being hampered by viability issues as rocketing construction costs are not being matched by rental incomes.

Earlier this year, Andy Tyler, head of London Office Leasing at Cushman & Wakefield, said: “Occupiers seeking high-quality, well-located space in London face an ever-diminishing pool of options.

“We are seeing the combined consequences of higher interest rates and yields, high construction costs and continued investor uncertainty versus the wants and needs of today’s occupiers for more and better space.”

Last week, Landsec said the amount of money it plans to spend on capital expenditure will come down from £1bn to just £200m by the middle of next year.

It added: “At present, we believe returns for new office and residential development are less attractive than new acquisitions of major retail destinations, so we do not plan to commit any meaningful balance sheet capital to new development in the next 12-18 months.”