Development

The significant development programme we initiated in 2003 was largely concluded during the year. Overall, we spent £144 million on construction costs and associated fees across 12 projects. The last of these projects started in early 2007 and, today, we have only £1.3 million of committed capital expenditure still to spend.


The balance of our development attention shifted during the year to preparing for our next programme, looking through the current downturn towards opportunities for further growth. Our development pipeline today encompasses 17 projects with a potential total area of 2.4 million sq ft, representing a 72% increase over these assets´ existing area, and covers some 50% of the Group´s portfolio. In each case, project start dates are flexible with healthy income being received prior to construction commencement.


Development pipeline

During the year, the key operational priorities of the development team were:

  • the completion of the three remaining projects;
  • leasing of the remainder of the completed space;
  • securing planning consents; and
  • design and feasibility studies for future projects.

Leasing

In August, we completed our 20,000 sq ft office refurbishment at Foley Street, W1 and by September had leased over half the building on ten year leases at £56.50 sq ft, in line with our targets. We have a good level of interest in the remainder of the space.

Our 112,800 sq ft Wells & More, W1 scheme reached practical completion in January 2009 and in the same month 60,900 sq ft of the office space was let to the fashion retailer, New Look.

We have encouraging levels of interest in the remaining 32,000 sq ft of offices being the best space on the fourth and fifth floors and 14,000 sq ft of retail space.

At our Blackfriars Road, SE1 site we have completed demolition and have deferred committing to construction until a significant pre-let is secured.


71,000
sq ft
let on practical completion


Construction

Construction at our only onsite scheme in Bermondsey Street, SE1 (47,000 sq ft) is proceeding well and will finish in June 2009.

We achieved practical completion at 160 Tooley Street, SE1, in June 2008 generating the final portion of development management revenues. Overall this scheme, which we sold prior to completion, delivered a return on capital of 129% and total development management profits of £14.1 million (of which £4.0 million was recorded in this financial year).


129% return on capital employed from Tooley Street development

Planning consents

We gained a resolution to grant planning permission from the City Corporation for our 74,000 sq ft refurbishment proposals at Buchanan House, EC1 in July 2008 and our 140,000 sq ft development at Fetter Lane, EC4 in January 2009. We submitted a planning application for our 82,000 sq ft development project at Broadway, SW1 in May 2008 and received a resolution to grant in March 2009.

Design and feasibility studies

At the Hanover Square Estate, W1, negotiations are continuing with Westminster City Council and Crossrail to support a comprehensive mixed use redevelopment above the proposed Bond Street East Crossrail station. The Crossrail transport legislation gained Royal Assent in July and is progressing through various funding and implementation phases. In addition, we are progressing design and evaluation studies for possible schemes at various prime locations including Park Crescent/Portland Place, Oxford Street, Regent Street and Great Portland Street, all in W1, and at Jermyn Street, SW1.


296,000
sq ft
planning consents obtained