L&G pours £400m into Cardiff project

One of Britain’s biggest investors has given its backing to a regeneration project as the government seeks more private money to fund the development of housing and infrastructure.
Legal & General has agreed a £400 million joint venture deal to develop a 12-acre site in Cardiff that is expected to help to create 10,000 jobs in the Welsh capital through the development of a million square feet of office space.
The Central Square project is the latest urban redevelopment project to be funded by the insurance group, which has committed £1.5 billion to infrastructure investments over the next five years and has received the backing of George Osborne, who described the scheme as a “major vote of confidence” in Wales.
Writing on The Times website, the chancellor and Nigel Wilson, the chief executive of L&G, said that there had to be a “positive, constructive collaboration” between the government and private sector investors to address issues such as the country’s housing shortage and the lack of infrastructure investment.

Times

We are working to ensure that the recovery is truly national, felt in all parts of the country
George Osborne and Nigel Wilson
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Britain is firmly on the road to recovery, thanks to the hard graft of working people, the entrepreneurial spirit of our great businesses and the long-term economic plan to which we’ve stuck.
But now we must do more to ensure that recovery is truly a national one, felt in all parts of the country.
For too long our economy was too dependent on the City of London and the investments made in our great capital.
But we now have a unique opportunity to change that — and we’ve already started to do so.
As we move further down the path to prosperity, it is vital that the economy is rebalanced. We must make sure that areas outside London receive more investment and regeneration, and that jobs continue to be created right across the country.
Confidence is rising in our cities and towns that they can both borrow from the best of what happens in London and create their own innovative growth models that will boost our economy.
Positive, constructive collaboration between central government, local government and the private sector is making this happen — there are extraordinary investment opportunities right across the UK.
According to the latest data, the north grew faster than the south; Wales experienced the fastest increase in employment over the past year; and since 2010 two thirds of new private sector jobs were created outside London and the southeast.
But a continued rebalancing of our economy is crucial to the sustainability of the recovery.
A great deal of work has already been done. Large investments have been made in roads, railways and broadband right across the country, improving connections for everyone. Alongside this the devolution of powers to areas such as Manchester and Cornwall is giving local people greater control over how to spend public money. But it’s through public and private sector collaboration that we can truly supercharge the transformations we need in Britain.
That is why today’s announcement from Legal & General and Rightacres is so important — just the sort we want to see in cities across the country. The £400 million investment will completely transform one million square feet in the heart of Cardiff’s city centre, making it the focal point of the city’s enterprise zone and creating 10,000 local jobs.
But the investment doesn’t stop there. As we write, we’re working together in China, opening up still more opportunities for great British firms. And last month Legal & General also backed another regeneration scheme in Leeds that will deliver 13,000 local jobs and build 7,000 new homes. This is long-term investment, pensions and savings being put into bricks and mortar in the UK to deliver growth today, and for future generations. It’s a huge vote of confidence in Britain.
It all forms part of a £15 billion plan for urban regeneration across the country. The government has played its role by setting up the Regeneration Investment Organisation to help major long-term investors to find credible projects to back.
This is a great example of how the government can work with businesses to support investment and create thousands of jobs for the local economy. It also demonstrates the crucial role that both private sector and government can play in making sure the whole country feels the effects of our recovery.
Today’s announcement is fantastic news for Cardiff and our national economy. But it is only one step in a long journey. We look forward to seeing many more projects like this coming to fruition right across the country, helping us all to build a One Nation recovery.
George Osborne is chancellor of the exchequer; Nigel Wilson is chief executive of Legal & General

He confirms that the rents in the proposals are higher than that paid by Blake Morgan.

Set for the Beeb

Rhys James, head of the Cardiff office of DTZ and Rightacres’ agent, elaborates by saying that he is talking to four parties where the interest is sufficiently advanced to agree terms, including one tenant that wants a complete floor of 16,500 sq ft. Rents could advance, says James, to £24/sq ft.

Yet if all goes to plan, Central Square will be better known as the BBC Wales headquarters. The BBC Trust has yet to give the final go-ahead enabling Rightacres to grant a 20-year lease on 150,000 sq ft offices and production space. Cardiff council has faith the trust will sign because earlier this month it closed the bus station to make way for the BBC to have its new headquarters opposite Cardiff Central station.

“Before construction of the new building can begin, an ‘agreement to lease’ must be agreed and approved,” says a spokesperson for BBC Wales. “Although work on this agreement is progressing well… it is taking a little longer than we expected when we announced our plans last summer. This reflects that a project of this scale and complexity requires meticulous attention to detail and it’s vital we get it right.”

Widnall says that all the possible tenants with Cardiff requirements are looking at Central Square, including the Ministry of Justice (MoJ), which is believed to be looking for 130,000 sq ft in central Cardiff.

The agent in charge of the enquiry, Tom Merrifield, who heads the Cardiff office of Bilfinger GVA, will not confirm he is acting for the MoJ but says the client has been provided with all the information about the Cardiff property that is available, and he awaits the response.

The others seeking offices include MotoNovo Finance, which wants 50,000 sq ft; law firm Slater & Gordon, which is looking for 20,000 sq ft; Hugh James, another law firm, looking for 90,000 sq ft; the Julian Hodge Bank, wanting 15,000 sq ft; and Legal & General, with an 80,000 sq ft requirement.

Assessing the options

They could await further development of Central Square or wait to see who will develop the denationalised site in Callaghan Square. The cheaper option would be to go to 2 Capital Quarter, which is under construction by local developer JR Smart.

The development of an 85,000 sq ft office, like Callaghan Square, is south of the railway lines that bisect Cardiff. But most of the space may not be available for much longer because an NHS Trust is close to leasing 52,000 sq ft of the new space. The quoting rent is £18.50/sq ft, but the trust is rumoured to have struck a good deal as the first tenant.

Phillips says that the trust looked at moving into St Patrick’s House in Penarth Road, vacated by AA Insurance Services, which relocated into Topland’s Capital Tower in Grey Friars Road, into 15,720 sq ft at a rent of £12.50/sq ft. But the lure of a new building to the trust trumped the 15-year-old St Patrick’s.

Smart was able to develop 2 Capital Quarter speculatively with the rumoured £15m that the Welsh government paid for the multi-tenanted 1 Capital Quarter. Now, Hart’s department is interviewing agents to sell 1 Capital Quarter.

As with the proposed sale of the Callaghan Square development site, the government could make a profit.

While the Welsh government exits its property role, the public sector is not leaving the stage entirely. Cardiff council has plans for its own development, with inital plans for a conference centre evolving to become a proposal for a new arena. The plans could see the relocation of the brewery of SA Brain & Co from south of the railway line in the city centre to an out-of-town location. The site could then be combined with the car park to the south of Central station, with Network Rail replacing the surface car park with a multi-storey parking building.

This saga will run for a long time. Ironically, the council had wanted to buy Callaghan Square for just such a project, before the Welsh government acted more quickly in 2013 for its now-aborted attempt at office property development. Certainly, despite the government’s withdrawal, parts of Wales’s public sector still believe it has a major role to play in big capital projects that even in an improving market the private sector still cannot manage.

http://m.propertyweek.com/5076311.artic ... te=enabled

Crikey, it's like waiting for busses and then some. I assume that's from the times or something similar. If so then the story has a lot of merit.

With number 2 capital quarter being almost leased in full I wonder whether JR Smart will crack on with some of the tall apartments blocks? It's also great news for rightacres having that sort of investment backing, I'm pretty sure we will see a lot more development around the square now. To put it into context St Davids 2 cost 750m and that has a huge footprint - larger than central square I'd guess (although Ive not checked).

Having the ministry of justice here would be a major coup and could help transform cardiff into a top legal centre.

I saw the front page of the Echo this morning at the garage and picked it up because it had this on the cover. I haven't had a chance to read it and didn't take in the £400m bit and had assumed it was just L&G confirming taking space at Number 2.

I'm gobsmacked, there's almost half a dozen key things mentioned above.

In the WM today here :

http://www.walesonline.co.uk/business/biggest-ever-property-deal-wales-10104054

It is a huge property transaction. Its more than three times the highest figure for office investment turnover in Cardiff (around £125 million in 2007), and 5-6 times the average annual figure (£70 million ish). Be interesting to see whether this is one forward transaction, or investment on completion or what... and how it breaks down into commercial versus residential space. Haven't read everything above yet.. so will do that now!

Fantastic news. L&G clearly have faith in Cardiff!

Interesting that L&G are potentially lined up for a relocation to Number 2 Central Square and they've basically just gone and purchased that plot ! I wonder how that one will work out ?

Interesting that L&G are potentially lined up for a relocation to Number 2 Central Square and they've basically just gone and purchased that plot ! I wonder how that one will work out ?

they will effectively have the lease at cost (of acquiring from the developer) rather than a landlord adding a mark up. If they were going to move then it makes sense to keep the rent down