Retail stabilises, offices growth continues at British Land
British Land yesterday reported a 4.2% increase in NAV to 525p per share for the half-year to end-September, and said it had seen a stabilisation in retail rental values with growth seen in the best retail locations. Rental growth continued in the group’s London offices portfolio thanks to the limited supply of high-quality space. Strong letting activity boosted the occupancy of the overall portfolio to 98%.
Chief executive Chris Gregg said: “We had only modest yield compression in the period and the benefits of our development activity have yet to be reflected in our valuation.” The group has committed to a £1.5bn central London development programme (British Land’s share £1bn) that will deliver 2.1m sq ft of prime space into the market, at a time when supply is expected to be restricted.
British Land agreed new lettings and renewals on nearly 500,000 sq ft of retail space, 80% of which were on long-term leases. In offices, the group let 217,000 sq ft of new office space at average rents 14% above ERV. It also agreed 139,000 sq ft of lease renewals in the period.
The group expects to be able to exploit the growing demand supply imbalance in London offices and to benefit from a growing need from a significant number of retailers to take new space in the best locations. “However, we remain vigilant with respect to the impact of next year’s VAT increase and government spending cuts,” it added. In the investment market, British Land expects the divergence between prime and secondary to continue and probably to gather pace. “At the same time, we are seeing more property coming to market from banks and other involuntary or unwilling holders of property. We are confident that British Land will be able to take advantage of these opportunities.”
Meanwhile Property Week is today reporting that the City development site at Leadenhall Triangle was put into administration last night. It says that PriceWaterhouseCoopers has been appointed as administrator to the large site, which is owned by clients of investment manager Investream and was once poised to be redeveloped as a 1.25m sq ft headquarters for a major investment bank.
