Hines has secured a 36,000 sq ft leasing at Grain House.
The firm has agreed to a 15-year lease for the 91,000sq ft scheme, which is currently vacant and has planning consent for a landmark repositioning which will combine four interlinked period buildings to deliver one consolidated modern office scheme, with street-level restaurant and retail amenities.
When completed in early 2023, the building will become the new headquarters for Hines UK and Hines Europe, which are both currently based at 5 Welbeck Street in London.
With Hines occupying three floors of the five-storey building, 32,000 sq ft of office space remains to lease, along with a further 23,000 square feet of leisure and retail space.
Lars Huber, CEO, Hines Europe, commented: “Our new European headquarters at Grain House will provide us with exciting space where we can continue the growth trajectory of our European and UK business, and provide a highly attractive and collaborative modern work environment for our employees. It was important for us to remain in the West End, and this internationally renowned Covent Garden location represents the beating heart of London’s hospitality and entertainment sector. And with all the fantastic upgrades in the area to the public transportation network it is a rapidly evolving commercial hub.”
Paul White, HEVF 2 fund manager, added: “The Fund is delighted we could strike this lease agreement with Hines, significantly de-risking this flagship London investment. The Grain House scheme exemplifies the conviction shared by the Fund and Hines corporate management in the nature of location and design aesthetics of workspace that will flourish in a post-COVID-19 environment. We look forward to commencing work on-site refurbishing these buildings before the end of this year, delivering the best project of this scale and ambition in the West End in early 2023.”
Ross Blair, Head of Hines UK, commented: “As with most companies, whether in real estate or any sector, the office is hugely important to the success of our business and performance and well-being of our team. While the extended period of remote working has demonstrated the adaptability and continuity of day-to-day operations, it has also highlighted the fundamental need to bring people together to interact, engage, be creative and inspire face-to-face.”
Hines European Value Fund was represented by Colliers, Hines was advised by Edward Charles & Co.
06/10/2020 20:39 by Buildington
Hines has secured the purchase of Grain House on Drury Lane in the heart of Covent Garden from corporate pension fund clients of Savills Investment Management.
The vacant property, which has been acquired on behalf of the Hines European Value Fund 2 (HEVF 2), has existing planning consent for a landmark 91,000 sq ft mixed-use development.
The refurbishment programme will begin later this year and will incorporate the addition of a two-storey roof extension across the whole site, with flexible office floorplates ranging from 6,222 sq ft to 15,791 sq ft arranged around an atrium with character finishes including exposed concrete, steel and brickwork.
The building will also provide extensive external terracing and has been designed to achieve BREEAM Excellent, WELL Building accreditation as well as enhanced digital connectivity standards with WiredScore.
This is the third landmark acquisition Hines has secured in Central London recently, following the purchase of two prime, flagship and retail-led mixed-use properties on Oxford Street.
The purchase represents the fourth for HEVF 2, bringing the amount of equity allocated by the fund to EUR 350 million. Hines recently announced the first closing of the fund, securing EUR 637m of equity commitments in just three months after its launch, exceeding 50% of the final EUR 1.25bn fundraising target. When factoring in leverage, HEVF 2 is expected to have total purchasing power approaching EUR 3 billion, making it Hines’s largest closed-end fund in Europe to date.
Savills IM sold the asset on behalf of a longstanding separate account for a corporate pension client. The account, which the firm has operated for over 30 years, has outperformed over every time horizon, with three-year rolling outperformance in 19 of the last 20 years. Run by Lucy Winterburn, the account is split into Core and Supercore funds. Both invest solely in the UK and have a current strong bias towards the industrial sector, London and the southeast. The account currently manages assets of over GBP 670m.
Jake Walsh, Managing Director, Hines UK, said: “New office schemes of this scale and quality in central London are very rare and with Covent Garden rapidly evolving into a dynamic commercial hub alongside its long-held reputation as a prime retail and leisure hotspot, this represents a fantastic investment.”
Lucy Winterburn, Director of Investment at Savills Investment Management, commented: “We are sad to say goodbye to an asset that has served the fund so well both in terms of income and capital return over a number of years but is now ripe for redevelopment. The planning consent that has been secured offers the purchaser an opportunity to comprehensively regenerate the island site by combining four distinct buildings into one.
The scheme should deliver classic Covent Garden office and retail space with plenty of character and style. Our client’s decision to sell is motivated by their conservative attitude to development risk on this scale. We will watch the development with interest and wish the Hines’ team well in their development and leasing phase.”
Paul White, HEVF 2 fund manager, said: “Following closely on the heels of the fund’s acquisition of our flagship retail and office scheme on New Bond Street, we’re able to capitalise on the pricing discount that has opened up between prime London and Continental Europe investment. The occupier market fundamentals remain strong and the certainty provided by Brexit and political stability makes London an attractive location for our investors, and we’re pleased to have secured this off-market investment.”
10/03/2020 20:02 by Buildington