Battersea Gets Another Hot Office Occupier, But £1.6B Power Station Deal Is Deferred Again

The office element of the huge redevelopment of Battersea Power Station is now fully let following a 40K SF deal with a fashionable business members club.

But completion of the £1.6B deal to buy the commercial element of the scheme has been deferred for a second time, after the leader of Malaysia’s ruling party said it should be examined by government regulators.

Battersea Power Station Development Co., which is owned by a consortium of listed Malaysian companies and pension funds, said this week that No18, a business members club owned by listed flexible office giant IWG, had agreed to take the remaining 40K SF of office space within the famous power station building itself.

In September 2016, Apple agreed a deal to take 500K SF, the vast majority of the office element of the development.

No18 is a Swedish business bought by IWG last year. It has two sites in Sweden, one in the U.S. and one in Switzerland, and the Battersea outpost will be its first in the U.K. Its sites are a mixture of coworking, serviced offices, meeting rooms and common areas.

No18 will create a bespoke offering for the power station called The Engine Room. Set over two floors overlooking the southern atrium, it will look down into the two turbine halls that will house more 100 shops and restaurants. The deal means the 1M SF commercial element of Battersea, with offices, shops and leisure facilities, is now 52% leased ahead of opening.

Battersea Power Station Development Co. added that there will be another 750K SF of offices in later phases of the development, and that the scheme could become a destination for tech and media occupiers.

In January the company announced that heads of terms had been agreed on a deal to sell that 1M SF commercial element, comprising the power station building, to two Malaysian pension funds, EPF and PNB, for £1.6B. They already own stakes in the entire scheme, which also comprises more than 4,000 homes and has a development cost north of £8B.

But in April the ruling party of Malaysia lost an election after allegations of corruption against then-President Najib Razak. Anwar Ibrahim, who leads the newly elected Pakatan Harapan party, said deals undertaken by Malaysian sovereign and pension funds under the previous regime should be investigated.

“All these deals which are considered dubious, including investments in housing in London, will have to be investigated,” he told the Guardian. “Yes, that includes Battersea. Because they were made using state funds. We have to be convinced that this was the right investment decision and that there was no political influence or direction.”

In May SP Setia, one of the listed companies which owns a stake in Battersea, put out a statement saying that the deadline to complete the deal had been extended to 29 June. Then on 31 July the company put out another statement saying that the deadline had been extended to 30 September.

“The parties are continuing to work positively and constructively together towards completing the proposed transaction,” it said in the statement.