June 20 (Bloomberg) -- Land Securities Group Plc, the U.K.’s largest real estate investment trust, said it will spend 260 million pounds ($400 million) to develop two buildings with offices, restaurants and shops near London’s St. Paul’s Cathedral.
Construction of the New Ludgate development will begin in August and is expected to be completed in April 2015, the London-based company said in a statement today.
“Our decision to commence the speculative development of 1 and 2 New Ludgate reflects our confidence both in the City office market, where we believe supply of new space will be constrained in 2015, and in the quality of the attractive and highly efficient office space we are creating” Colette O’Shea, Land Securities’ head of London development, said in the statement.
Land Securities is seeking to take advantage of increased competition for offices in London, where the value of income-producing properties rose 7.4 percent in the first quarter, according to Investment Property Databank Ltd. Speculative development in the City of London financial district has waned since the global financial crisis hit in 2008 as development funding declined and financial-services companies cut staff.
Land Securities began speculatively building a 37-story tower nicknamed the “Walkie-Talkie” in January 2011 and has reached agreements with tenants for about 56 percent of the space. Speculative development is building without first having agreements with tenants in place.
New Ludgate, close to London’s Midtown and outside the main financial district, will have 379,000 square feet (35,000 square meters) of space and consist of two buildings connected by a public square. Shops and restaurants will take up 33,000 square feet of space in the lower levels. Skanska AB will oversee the construction, Land Securities said.
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