British Land Company PLC

Development

Our development programme combines our skills in the development process, from planning and design to construction management, with our customer and market focused real estate knowledge, to create distinctive added value. Development involves higher risk than our standing investment properties and requires careful management, balancing risk and reward, while considering market cycles across time and in the broader context of our business.

Important elements of development projects include the transport and other infrastructure attributes of the location, quality of specification, configuration and flexibility of accommodation, and timing of delivery into market demand. Emphasis is also placed on working with talented architects to create well designed and sustainable buildings that enhance their location - all contributing to appeal to occupiers.

Completed developments

Development of the 35-storey Broadgate Tower, EC2 completed in August 2008, providing 400,000 sq ft of highly flexible offices. The striking building has attracted considerable occupier interest: as set out under Asset Management above, 64% of the offices are let or under offer. The Tower and 201 Bishopsgate (where the offices are now 88% let and tenants are in occupation) have taken their place as important additions to the Broadgate Estate.

The Giltbrook Retail Park in Nottingham, a mixed use scheme of retail and industrial space, completed on time and on budget in September 2008. All units at the 127,000 sq ft retail park are now fully let, open and trading. Tenants include Laura Ashley, Carpetright, CSL, Starbucks, Bhs, Next, Comet and Frankie & Benny's. An improved planning consent achieved on two units enabled letting of these to Boots and Pets at Home, at rents above those for the units let earlier. The success of the park has confirmed our expectations of Giltbrook as an important regional retail destination. The industrial space is 50% let, sold, or under offer.

We have a good record of delivering and letting developments profitably, and of achieving sales of projects to recycle capital. Over the last five years we have completed over 2.4 million sq ft of major London office projects and sold over 1.3 million sq ft.

Committed developments

The programme in the UK is now limited to the City offices at Ropemaker and the West End offices and residential scheme at Osnaburgh Street, where the office buildings are known as Regent's Place One and Regent's Place Two. The Puerto Venecia retail project in Spain is progressing, as set out below, although we are delaying the timing of the Shopping and Leisure Centre elements in light of the current retail market in Spain.

The value of these committed schemes overall at 31 March 2009 represents just 4% of the total portfolio.

Committed developments				Cost		Value March 2009 £	Notional interest £m3	Total pa	Let/ pre-let	Sales £m5
	PC1		Sq ft '000	Total	To complete
London Offices
Ropemaker	Q2 2009		586	220	56	204	2	27.1	9.27	-
Regent's Place One & Two 6	Q3 2009		380	177	53	105	5	17.6	-	-
One Osnaburgh Street (residential)6	Q3 2009		110	72	22	29	1	-	-	58
Total Offices			1,076	469	131	338	8	44.7	9.2	58
Retail Parks
Puerto Venecia, Zaragoza (shopping centre)8	2011/12		1,333	105	73	49	10	9.7	3.0	10
Total			2,409	574	204	387	18	54.4	12.2	68

¹Estimated practical completion of construction

²Estimated construction cost

³From 1 April 2009 to PC

⁴Current estimated headline rent
(excludes provision for tenants' incentives)

⁵Parts of development sold, no rent allocated

⁶Osnaburgh Street development comprises Regent's Place
One & Regent's Place Two (offices) and One Osnaburgh Street (residential)

⁷Option until June 2009 to take a further 21,630 sq ft

⁸Joint venture (Eurofund Investments Zaragoza) - BL share 50%

Data for Group and its share of Funds and Joint Ventures (except areas shown at 100%)

Leadenhall now a prospective development

Ropemaker, London EC2, the 20-storey prime City office development on a 1.2 acre site close to Moorgate and Liverpool Street, reached practical completion in early May 2009. The offices have attracted encouraging tenant interest in a difficult market. Agreements have been entered into recently for the pre-letting to The Bank of Tokyo-Mitsubishi UFJ, Ltd and Mitsubishi UFJ Securities International plc ('MUSI') of 186,500 sq ft (32%) of these offices, plus an option (until June 2009) over a further 21,630 sq ft. The average initial rent is £46.50 per sq ft on a lease term of 20.5 years, with a minimum uplift to £52.50 per sq ft at first review in 2014. An initial rent-free period will apply of 48 months from the practical completion of the building to 'shell and core' specification during which the new occupier will fit-out the offices, integrating the 'category A' works of installing raised floors, suspended ceilings and light fittings with its own required offices finishes and layout. These banks will be co-locating from their existing buildings at Finsbury Circus and 6 Broadgate. During Q1 2011, MUSI will surrender 112,000 sq ft at 6 Broadgate, where their lease is due to expire in 2013.

Ropemaker is one of the City's most sustainable developments with a range of efficient floor plates and extensive roof gardens. The building meets our objectives to provide accommodation attractive to occupiers in the wider context, to include minimising use of resources. Ropemaker is on target to achieve 15% lower carbon emissions than set out in the Building Regulations and an 'Excellent' BREEAM rating.

The Building Research Establishment Environmental Assessment Method ('BREEAM'), the most widely used measure for development, evaluates a broad range of the environmental impacts of new building. All our London office developments have target or provisional BREEAM ratings of Excellent (i.e. at the top of the scale).

The 380,000 sq ft office buildings, Regent's Place One and Regent's Place Two, are progressing well at Osnaburgh Street, London NW1, on target for completion later this year. Marketing of the offices is under way, although our expectations, as is usual practice in the West End, is that we will see occupational interest once the buildings are complete. As part of this development, on a 2.5 acre site on the west side of the Regent's Place Estate in the West End of London, we have constructed 110,000 sq ft of residential accommodation at One Osnaburgh Street being part social housing and 62 apartments for open market sale. These have successfully attracted considerable interest, despite market conditions, and contracts have been exchanged for the sale of all the units. The social housing has been pre-sold to a Housing Association. Retail space of 8,000 sq ft is included in the development, to add to the occupier and public amenities on the Estate.

British Land was named 'Developer of the Year' at Property Week's industry awards in April 2008, noting our development and letting success in the City, particularly at 201 Bishopsgate.

At Puerto Venecia, Zaragoza, our retail and leisure investment and development joint venture in Spain, the IKEA-anchored 900,000 sq ft Retail Park is consolidating well with some significant recent openings, including a Leroy Merlin DIY store (118,000 sq ft) and a flagship Media Markt electrical and computer store (43,000 sq ft). The Park is now close to 90% let or sold with positive tenant interest in the few remaining units. The success of the scheme has firmly established it as one of the premier retail parks in Spain in terms of location, design, accessibility and quality of operators.

In addition to the open and trading Retail Park, the further development areas at Puerto Venecia comprise the 1.3 million sq ft Shopping and Leisure Centre. There has been positive progress in the leisure element where lettings in the last quarter have doubled to 57% of the area, including recent pre-lets to the multiplex operator, Cinesa, and to the US surfing concept, Wavehouse. We also expect shortly to settle a letting to a national bowling operator. As a result, of the total 2.2 million sq ft project, 70% is now let, pre-let or sold. In addition to those already mentioned, tenants include notable names such as Primark, Desigual, Mango, Decathlon and Toys R Us. Since the start of 2009, progress in respect of letting the Shopping Centre element has slowed considerably against the backdrop of economic conditions in Spain and the adverse effect on consumer spending, particularly in fashion, which is the primary focus of this Shopping Centre. In light of this, we have agreed with our 420,000 sq ft anchor department store partner, El Corte Inglés, to reschedule the opening of the Shopping and Leisure Centre elements to 2011/12. We will keep under review the development programme and target opening in order to provide us with greater flexibility in respect of our ongoing letting strategy and to launch the Shopping and Leisure Centre into an anticipated stronger retailing environment.

Prospective developments

At the Regent's Place, London NW1 estate, the next phase of development will be the North East Quadrant. Detailed planning consent has been obtained for the 380,000 sq ft of offices and 120,000 sq ft of residential accommodation.

At Leadenhall the demolition and preliminary basement works are near completion. We are reviewing the design and construction proposals alongside a reassessment of the timing of delivery of these offices into the market.

Planning consent has been achieved for a 280,000 sq ft 35-storey office building at Colmore Row in Birmingham. A planning consent for up to 2.2 million sq ft of mixed use space on land we own adjacent to Meadowhall Shopping Centre has also been obtained.

We continue to work on proposals for a redevelopment or refurbishment of the offices at 4 Broadgate, EC2 and at London Euston Station where, together with Network Rail, we are master planning a 15 acre site with potential for up to three million sq ft of mixed use development.

Overall, these projects are being managed with minimal ongoing expenditure and with limited capital committed of some 1.8% of the overall portfolio. We are able to see through the cycle and evaluate opportunities pending decisions as to when, subject to market conditions, it may be appropriate to proceed.

Prospective developments		Sq ft '000	Value, £m March 2009	Planning
The Leadenhall Building	City Offices	610	55	Detailed
Regent's Place NE Quadrant	West End Offices/ Residential	500	27	Detailed
Colmore Row	Provincial Offices	280	8	Detailed
Meadowhall additional land	Mixed use	2,200	11	Outline
4 Broadgate	City Offices	Potential refurbishment or redevelopment	40	Pending
New Century Park1	Mixed use	Potential land sale	7	Detailed
Theale	Residential	Potential land sale	13	Detailed
Euston Station 2	Mixed use	Master planning in progress		Pending
Canada Water3	Mixed use	Master planning in progress		Detailed/ Outline

¹Joint venture with Goodman Real Estate (UK) Limited

²In partnership with Network Rail

³Joint venture with Canada Quays Limited

Data for Group and its share of Funds and Joint Ventures (except areas which are shown at 100%)

Back to top