PROPERTY firms Land Securities and Canary Wharf Group (CWG) will team up to build the £500m Walkie Talkie project on 20 Fenchurch Street, the pair announced yesterday.
Land Securities has sold the site to a newly-formed 50-50 joint venture with CWG for £90.2m, in line with the March 2010 valuation.
Preparatory work on the cleared site will begin immediately, with CWG’s own construction firm set to start construction work in January 2011. The 690,000 square foot office space should be ready by the second quarter of 2014.
Land Securities, the UK’s largest real estate company, shelved the 36-storey skyscraper last year after clearing the site, worried it would not attract tenants in the dour financial climate.
The 150m-high Walkie Talkie, designed to be top-heavy partly to cash in on the higher rents commanded by top floors, will be one of several City skyscrapers vying for tenants at a time when dozens of rent contracts are due for renewal.
Companies such as insurer Aon, asset manager Schroders and Bloomberg are currently looking for large office spaces.
CWG, a subsidiary of Aim-listed Songbird, has agreed to sell 35 per cent of the venture to its biggest shareholders Morgan Stanley Real Estate, sovereign wealth fund Qatar Holding and the state-owned China Investment Corporation. CWG will retain the remaining 15 per cent.
The deal will allow CWG, operator of the eponymous east London business hub, to maintain a foothold in the City office market where rents are expected to rise by 37 per cent to £58 per square foot by the end of 2012, broker Knight Frank estimates.
“It’s going to be the largest building we have ever built in the City,” company secretary John Garwood told City A.M. “It is further evidence of our diversification and move into the Square Mile following the success of Drapers Gardens.”