AEW has acquired an office redevelopment opportunity at 95 New Cavendish Street from LBS Properties and Baumont Real Estate Capital in London’s Fitzrovia for £22m.
The asset currently comprises circa 20,677 sq ft of office space arranged over lower ground, ground and four upper floors, and has planning consent for a comprehensive repositioning programme, including the creation of an additional floor offering circa 1,900 sq ft of new office space and a communal roof terrace.
The building, which was last refurbished in 1990, occupies a prominent island site with natural light on almost every side. As part of the refurbishment programme, the building will benefit from the installation of larger windows and a new façade.
The asset is currently fully let to Gleeds on a short-term basis, with works expected to begin early 2025 once the occupier has vacated.
AEW concluded the transaction on behalf of its recently announced discretionary separate account mandate for a German pension fund, which has a focus on establishing a value-add real estate portfolio in major European markets.
Spencer Corkin, head of value-add strategies at AEW, said: “The acquisition of 95 New Cavendish Street provides a compelling opportunity for our client to invest in the London market with a notable redevelopment in a strong micro-location. Fitzrovia is currently experiencing a shortage of well-located, state-of-the-art office space with limited new development, which has led to a large supply-demand imbalance and continued upward pressure on prime rents.
“According to AEW’s research, prime offices are projected to generate the highest returns across all real estate sectors over the next five years, driven by recent re-pricing and increasing occupier demand for high-quality space. This vibrant area of London continues to attract a broad range of occupiers and we believe the transformation of this asset into a modern, sustainable building, will offer attractive space to prospective occupiers whilst generating value for our client.”
Lars-Henning Pylla, fund manager at AEW, added: “We are pleased to have been able to secure this strategically located asset for our investor just shortly after the launch of the new mandate. In the value-add sector it is particularly important to be able to act quickly when opportunities arise. We are convinced of the London market’s potential over the next few years and are now focusing on further portfolio expansion in different sectors across Europe’s prime locations.”
AEW was advised by Knight Frank and Mishcon de Reya.
