London’s Biggest REITs Spread South Of The River

Time was, south London was the badlands.

In Shakespeare’s day, the playhouses and bear-baiting pits were forced to establish themselves south of the Thames to keep them away from the respectable folk in the old City of London north of the river. More recently, fewer tube stops have been built in south London, holding back its economic development. 

But now London’s biggest office REITs are increasingly looking to south London to find value in new developments. 

Landsec, London’s largest property owner, said this week it had agreed to forward purchase a 77K SF office scheme currently being built by Berkeley Homes in Oval, south east London. 

The company said rents in the area are currently £50 to £55/SF, which is lower than other comparable areas. The company’s office portfolio has, for the past 20 years or so, been located exclusively in the City and West End.

“This is in line with our strategy to offer a broader range of propositions for office customers,” the company said.

The building, called Oval Works, is not leased and forms part of the conversion of former gas holders next to the Oval cricket ground into 1,300 homes and commercial space. The building will be entirely powered from electric sources, eliminating fossil fuels, Landsec said. 

The purchase follows the announcement last December that Landsec will build a 370K SF timber office on Lavington Street in Southwark. 

Further to the south and east, British Land is building a massive mixed-use scheme comprising millions of square feet of offices and more than 3,000 homes on a 53-acre site at Canada Water. 

And Derwent London, one of the first blue-chip property companies to invest in Shoreditch in east London 20 years ago, has gone the farthest south of the lot. In 2020, it paid £38M for a 54K SF, 11-storey office building in Brixton.