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In Q4 2012, Derwent London acquired a 68-year leasehold interest in 25-27 and 29-33 Berners Street for £36.5 million, later extended to 127 years. Planning consent for the ‘Copyright Building’, 30 Berners Street, Fitzrovia, was granted in October 2014, to provide 87,150 sq ft of offices and 20,000 sq ft of retail space. Construction began once vacant possession of 25-27 and 29-33 Berners Street was achieved in 2015.
The Copyright Building is due to complete in Q4 2017, at which point Capita can move in. Capita pre-let the entire office space at a gross rent of £7.4 million per annum, which nets back to £6.5 million per annum after ground rent is paid to The Berners – Allsopp Estate, the freeholder. Capita has taken a 20-year lease at £86 per sq ft, 34 months rent-free and five-yearly, upwards-only rent reviews.
Derwent London has decided to sell its long leasehold interest in the Copyright Building to Union Investment Real Estate for £165 million, marking a net internal yield of 4.2% for Union Investment. £148.7 million is the adjusted sale price, taking into account rent-free periods and a rent guarantee on the vacant retail space. There are currently three retails units totalling 20,000 sq ft, with an estimated rental value of just over £950,000 per annum.
Eugene O’Sullivan, Surveyor and Director at Morgan Pryce, explains; “Rents have increased by almost 100% over the last six years in Fitzrovia, and the area has grown in popularity with media and tech tenants. Unfortunately, the huge rental growth translates to large increases in rates, which may have a negative impact on rents in the area, but currently demand remains high.”
This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.