Great Portland Estates plc (“GPE”) has completed the sale of the freehold of 73/89 Oxford Street and 1 Dean Street, London, W1 (“Oxford Street”) to Norges Bank Real Estate Management (“NBREM”) for a price of £276.5 million, reflecting a net initial yield to the buyer of 3.2%.
Paul Sandilands Director, Lifschutz Davidson Sandilands
With the site on a prominent corner location at the junction of Oxford Street and Dean Street – opposite the Tottenham Court Road Crossrail station, balancing the current expectations of Oxford Street occupiers while respecting the character of the neighbouring buildings in the Soho Conservation Area was key.
Clever site assembly
Our proactive approach to site assembly facilitated this exciting 0.43 acres redevelopment site adjacent to a Crossrail station.
In 2011, in an off market transaction with a private investor, we swapped our freehold interest in 79/89 Oxford Street, plus a payment of £7.5 million, for a new 250-year leasehold interest in both 79/89 Oxford Street and the adjacent 73/77 Oxford Street.
The transaction not only doubled our existing ownership, but also paved the way for a first class retail and office development. In 2016, we were able to acquire the freehold for the entire site, again off market, enabling us to attract a broader range of investors in our decision to forward sell the completed development.
Best in class building design
Our design brief for 73/89 Oxford Street was to replace the tired art deco facade building with a vibrant retail offer, sensitive to the Soho Conservation Area.
The new 90,700 sq ft building will offer a striking façade of stainless steel, glass and aluminum, providing large scale retail units over four floors, with flexible 15,000 sq ft office floorplates above.
A kink in the site is expressed in the Oxford Street façade and will widen the pavement towards the Crossrail station, opening views to the entrance and easing the flow of pedestrians into Dean Street and the station plaza.
The office entrance on Dean Street utilises the original terracotta façade to provide a striking four-storey reception, which will be flooded by natural light. To maximise the floor plates, but still retain the façade, we needed to raise the façade by 900mm. The scale of this task was a first for a building of this type.
Moving retail rents
Through the targeting of a short list of major retailers we pre-let the entirety of the retail space at 73/89 Oxford Street, 18 months before practical completion.
Our pre-letting to New Look at £600 Zone A in March 2015 was at a record Zone A rent in the area. This was a significant increase on the passing retail rent of £238 per sq ft at the property on purchase in 2011 and well ahead of the previous record in the area of approximately £450 Zone A.
In December 2015, we improved the rent further achieving £700 Zone A on our letting to Benetton who took the remaining unit, directly opposite the new Crossrail entrance, for their new central London flagship store.