British Land (BLND) has bought a large office complex behind Paddington Station from insurance group Aviva for £470m, bringing to a dramatic close the buying splurge initiated with a £493m placing in March. The company has now spent £758m on acquisitions this year, including a £143m mall in Ealing and the 50 per cent share of Surrey Quays shopping centre it did not already own. Tellingly, all these additions to the company’s £10.5bn portfolio are in London - but virtually none are inside Zone 1 of the tube map.
Called Paddington Central, its latest purchase was a major boom-era regeneration project funded by Aviva and various other City institutions and masterminded by Development Securities. Over the course of a decade, they turned a derelict railway goods yard into a very upmarket office park complete with open-air amphitheatre, a supermarket and luxury canal-side flats. Judging by the blue-chip tenants they managed to lure away from the West End core - including AstraZeneca, Nokia, Rio Tinto, Kingfisher and the Prudential - the plan worked.
But the office rents remain low by comparison with the wider West End, and 9 per cent of the space is still vacant. There are also two big office sites yet to be developed as part of the original masterplan. British Land has plenty of scope to improve the project - and its property value. The arrival of Crossrail to Paddington in 2018 should help.
