London developer says demand to retain buildings on the increase
London developer Derwent said it expects to carry out more refurbishment work in the coming years as demand for better energy and sustainability performance from existing buildings increases.
The firm is on site with two major new build schemes – Laing O’Rourke’s mixed-use job at 25 Baker Street and Kier’s Network Building, an office-led project, which are both due to be completed in 2025.
But announcing its 2022 results this morning, the firm said it was “planning to increase the volume of major refurbishment projects in the coming years where we see the opportunity to substantially raise ERVs [estimated rental values] reflecting increased quality, energy efficiency and sustainability credentials”.
It said schemes it expected to be giving a makeover to in the near to medium term included four totalling more than 750,000 sq ft – 1-2 Stephen Street in the West End, 20 Farringdon Road and 1 Oliver’s Yard, both in EC1, and Greencoat & Gordon House in Westminster.
It has submitted plans by AHMM for a 240,000 sq ft mixed-use scheme at 50 Baker Street while it added that its deal to buy City Road Island, the site of the Moorfields Eye Hospital and the UCL Institute of Ophthalmology near Old Street tube station, for £239m is expected to complete “from 2027”.
It added: “Our current appraisals suggest the 2.5 acre island site has potential for a 750,000+ sq ft mixed commercial use campus targeted at different occupier sectors, including Life Sciences among others. We have had constructive engagement with the London Borough of Islington. Our acquisition of the site is expected to complete from 2027, conditional on delivery of the new eye hospital at St Pancras and subsequent vacant possession of the site.”
Bouygues has recently signed a £300m deal to build a new eye hospital, called Oriel, at the Camden Knowledge Quarter at St Pancras. The scheme is due to be completed in 2027.
Derwent said income edged up 3% to £249m last year but the firm fell into the red with a pre-tax loss of £279.5m from a £252.5m profit last time. Net rental income was up 6% to £188.5m.
It added that build cost inflation rose by 11% but was now settling down and was expected to moderate this year and next.