British Land builds on good start to year with office lets

The UK’s second-largest listed landlord said its retail division had performed well in its first quarter

A flurry of UK office lettings and the expansion of shopping centres in Scotland has helped the property developer British Land toast “a good start to the year”.

The UK’s second-largest listed landlord said its retail division had performed well in its first quarter ending 30 June, with 129,000sq ft of deals agreed.

Footfall was up 0.9 per cent at the group’s shopping centres. It opened a £35.5m extension at its Glasgow Fort mall, including an 80,000sq ft store let to Marks & Spencer, and 32,250sq ft for new shops and restaurants.

Another 110,000sq ft of leisure-led expansions, often including cinemas and restaurants, also opened in Edinburgh and in Broughton, near Chester. The company also recorded 132,000sq ft of office lettings, with rents coming in about 1.6 per cent higher than it had estimated in March. It added that more leases were also being negotiated.

Lucinda Bell, the chief financial officer at British Land, said the company was benefiting from “an occupier market which is much less location loyal than it used to be”.

Ms Bell added: “People want to be in space that is attractive and in a good area for transport and amenities. The battle for talent means some will relocate.”

Deals included Facebook expanding its London head offices with 60,000sq ft on Euston Road.

Earlier this year British Land also let space in its 737ft “Cheesegrater” building to the skyscraper’s architect Rogers Stirk Harbour + Partners, which is moving from Hammersmith after 30 years. The tower – officially called the Leadenhall Building – is now 90 per cent let or under offer.

Analysts largely welcomed the office performance, and a Morgan Stanley note said: “We expect further strong net asset value growth in the next 12 to 18 months for British Land, driven by strong London office rental rises and improving retail property markets.”

A UBS note added: “We remain confident on British Land and continue to like the stock.”

During the period, it raised £350m of convertible bonds due 2020. Its shares rose 0.5p to 847p yesterday.