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Land Securities outlines £2.5bn of work

Developer Land Securities has set out its plans for 14 construction schemes, with the most immediate eight worth almost £2.5 billion.

The firm has eight developments either on site or with planning approval, totalling almost 400,000 sq m of space across the City and the West End.

It also has six schemes at the design stage - a mix of refurbishments and new builds that would add another 110,000 sq m.

The pipeline is further evidence of the recovery in the commercial sector, as developers look to cash in on cheap land and a predicted shortage of prime office space from 2012.

Land Securities chief executive Francis Salway said: “In London, supply is tightening and the outlook for rental value growth is extremely favourable.

“We expect strong double-digit growth in rental values for prime offices for a number of years, and we will access that growth through developing into the rising market.”

With half of the company’s spending already allocated, there are still a number of large-scale projects that remain up for grabs.

It has planning consent for four developments, thought to be worth about £1.1bn, where contractors have yet to be appointed.

These include the Walkie Talkie at 20 Fenchurch Street, where talks with potential development partners are ongoing.

Decisions are expected on both a partner and a main contractor in November, with work starting on site in the New Year and completion due in the first quarter of 2014.

Other developments where planning permission has been received include VTI2 in Victoria and Arundel Great Court in the West End.

Although these may not be completed until 2016 as current tenants have leases on existing buildings until 2012, talks with contractors are expected to progress over the next year.

The 62,000 sq m City Forum project in the City of London - being developed in partnership with Frogmore and Galliard Homes - is also expected to be on site in 2011.

Land Securities is trying to bring forward these developments, but if it cannot do so one of six projects currently at the design stage could plug the gap.

Meanwhile, the £540 million development at One New Change is expected to be completed later this year by contractor Bovis Lend Lease.

The £120m Park House project, being carried out by Mace, will be completed in 2012, while 62 Buckingham Gate - formerly Selborne House - will be completed by Sir Robert McAlpine by 2013 under a £100m deal.

These schemes have a total development cost including land of £1.3bn. The final job in the portfolio is Wates’ Wellington House residential scheme in West London.

Managing director of the London portfolio Robert Noel said building costs had fallen during the credit crunch.

“The cost we managed to secure the building contracts at for both Park House and 62 Buckingham Gate were between 25 and 30 per cent below the latest estimate cost of about 12 months before.”