British Land paid £470m to buy the Paddington Central campus in July 2013 and at that time announced £180m plans for new office developments at 4 and 5 Kingdom Street. The previous owners had already secured planning consent for 355,000 sq ft of office development.
Since then, British Land has made improvements to the design of 4 Kingdom Street and still expects to make a start on site by the end of the year, as originally envisaged.
However, a new planning application for 5 Kingdom Street will be submitted next year for an improved, larger scheme as part of a wider master planning exercise for the whole campus, the developer said.
The update on the development came as British Land today reported pre-tax profits of £1.11bn for the year ending 31 March 2014, a near four-fold increase on last year’s £260m.
Chief executive Chris Grigg said: “Our business is in good shape as evidenced by our strong results. We are well positioned to take advantage of London's continuing success and improving demand for the best retail space. We remain positive about the outlook for our markets although you could argue that political risks, both at home and abroad, are greater than they were a year ago and these may have an impact. In London, we see rental growth along with the letting up of completed development space being the key drivers of our Offices performance given yields have already compressed significantly. In Retail, away from London, investor appetite is strengthening and retailers are clearly more confident about the outlook for consumer spending and looking to take space in the best locations. We are more positive about the potential for further yield compression and expect rents for high quality space to benefit over time as consumer spending continues to improve.”
He added: “We expect to be more balanced in our acquisitions and disposals in the coming year. We will continue to take advantage of market strength to sell more mature retail assets and we have a number of assets under offer or in the market. Although the market remains competitive, we believe we can continue to take advantage of more complex situations to make attractive acquisitions. We will also move forward progressively with our new development programme and expect to commit to 4 Kingdom Street at Paddington in the coming year. Overall, we have worked hard to position our business for growth and we look to the future with confidence.”