British Land highlights strength of London despite Covid lockdowns with £400 million offices sale to Allianz

Reports of the death of the London office were proved greatly exaggerated again today after British Land sold £400 million of buildings in Marylebone, including its own head office.

The move takes its disposals this Covid-afflicted year up to £1.1 billion.

Investors in property companies traditionally see sales in the portfolio as one of the key signs of health and have largely been impressed by the level of demand this year in the face of Covid-19.

Overseas buyers in particular have seen the pandemic as a chance to negotiate lower prices and capitalise in the longer term rally of the capital’s economy.

Today’s deal was with Allianz Real Estate, which acts for several companies under the German investment giant Allianz’s umbrella. 

In return for £401 million, Allianz will take on 75% ownership of three buildings; 10 Portman Square, Marble Arch House and York House. 

The latter, opposite Marble Arch House by Marble Arch tube station, includes offices plus 22 flats. 

One of the York House tenants is British Land itself, which has signed a new 10 year lease.

New chief executive Simon Carter said the sale had crystalised value for shareholders. “This transaction demonstrates that, like us, investors remain confident in the long term prospects for high quality assets in prime London locations.”

He and British Land have been consistent in their belief that people will return to the office after the pandemic if companies’ bases are modern, well fitted out for team meetings and training sessions, and conveniently located for transport, shopping and entertainment. 

Its major project for 2021 is work on its big development at Canada Water, where it is planning a a major “campus” mixing office space, retail and homes aimed at creating what it calls "a new neighbourhood for London." 

Chris Grigg, who stepped down as chief executive this year, made such campuses one of the trademarks of his long tenure in office. 

However, he has admitted he was too slow in selling down its retail estate, which has been hammered by the shift to online shopping.

The retail element of its portfolio fell 15% between March and  September and could come under more pressure from the latest round of lockdowns shutting non-essential retail. Today’s reports that Tier 4 will be spread across the UK on Boxing Day will only make matters worse.