Europe News

Top City Skyscraper For Sale at $461 Million

Daniel Thomas, Financial Times

Tower 42, the tallest occupied skyscraper in the City, will be put up for sale as booming prices return to London’s commercial property market.

Sharon Lorimer

The 600ft former NatWest tower near the Bank of England is expected to fetch more than £300m ($461m) when its owners, Hermes Real Estate and BlackRock’s UK property fund, put it on the market this week.

The decision to sell the building, the largest single real estate deal this year in the Square Mile, will be seen as a further indication of the surge in interest among property buyers for trophy assets.

The London market has enjoyed another boom for prime property in recent months, with prices being asked on some buildings near to the peak of three years ago.

The weakness of sterling and warnings of a shortage of prime office space in the next few years have helped support the unexpected bounce in values for a market that had crashed harder than most owing to its exposure to the financial services sector. Tower 42 was built in 1980 for NatWest and was regarded as the first true skyscraper in the UK. It is now occupied by a number of tenants, producing a rental income of about £20m a year.

The sale will comprise five other low-rise buildings next to the tower, including the Grade-I listed Gibson banking hall, making it one of the biggest freehold sites in the City.

The fund managers, who bought it in 1998, want to sell to rebalance portfolios given the size of the building in relation to other assets. Jones Lang LaSalle, the property agent, will advise on the sale.

Tower 42 commanded among the highest rents at the peak of the last boom at about £70 per sq ft. Deals being negotiated are about £50 per sq ft, although predicted to recover further as office supply tightens.