Rightacres and Legal & General secure letting to UK government at Wales’ largest regeneration scheme
10 Aug 2017
Rightacres Property (Rightacres) and Legal & General (L&G) have completed the largest ever office leasing deal in Wales.
The UK Government will open a new Government hub at Central Square, Wales’ largest regeneration project, which is set to create over 10,000 local jobs and facilitate significant economic growth.
The UK Government has taken a 25 year lease on 265,976 sq ft of office space at Central Square which is being developed by Rightacres and funded by L&G. This latest announcement takes the total gross square footage of newly constructed office space at the scheme to over one million square feet, proving the success of this public/private sector partnership.
Central Square is set to become home to more than 4,000 public servants from several UK Government departments. This includes HMRC, who will run one of their 13 regional centres from the site, and the Office for the Secretary of State for Wales. The UK Government Property Unit (GPU), advised by JLL, is overseeing the deal for the new hub.
Construction of phase one of the Central Square project commenced in 2014, with One Central Square completed in March 2016. It was 21% pre-let to Blake Morgan LLP, demonstrating demand for high-quality office space in the area. Works are progressing on phases two and three of Rightacres and Legal & General’s scheme, which will include a new £120 million headquarters for BBC Cymru Wales, and are expected to be completed by mid-2018, offering a range of new local dining options and amenities for the influx of employees working in the area. With a host of other blue chip tenants, this latest letting establishes Central Square as one of the most successful regeneration projects in the U.K.
Bringing together the local development expertise of Rightacres, the progressive long term vision for the city of Cardiff Council, and long dated private capital of L&G, Central Square has been backed by an unbeatable partnership model. Together, the public-private alliance has enabled this scheme to be unlocked, delivering real UK growth and helping to further transform Cardiff city centre.
Paul McCarthy, Chief Executive of Rightacres, says: “Over the past few years, Cardiff has experienced the perfect storm of requirements; I don’t think there has ever been such a large number of office requirements in such a short time frame. The BBC, Hugh James, MotoNovo and Government requirements, which total over 600,000 sq ft net, all came within a two year period. Both the BBC and GPU projects were tendered, and we have been supported by a very strong team of professionals whose own track record have helped us secure these projects. We were also lucky enough secure funding from Legal & General who understand Cardiff and its vision.”
Tom Roberts, Head of Strategic Investment & Regeneration, LGIM Real Assets, added: “This pre-let to the UK Government represents another enormous milestone in the delivery of Central Square, one of the country’s most impressive and transformational regeneration schemes. This city gateway development is already delivering major social and economic benefits, and proves the model for the public and private sectors working together in order to unlock real UK growth. Our confidence in this project has been fully rewarded and the momentum continues to grow at pace. Securing this pre-let has been a huge team effort from all involved and we now look forward to continuing to work with our partners, Rightacres and Cardiff Council, to deliver further projects.”
Kerrigan Procter, Managing Director of LGR, said: “Central Square is one of the UK’s biggest regeneration stories. This pre-let is an excellent deal to have secured and another example of how Legal & General’s different business divisions have worked together to drive forward this major urban regeneration project. Our financing for Central Square is a strong investment for us as the long term income it produces helps to pay our customers’ pensions, as well as creating new jobs and driving economic growth - which is good for business and our customers.”
L&G has already invested £8 billion in UK infrastructure, direct investments and urban regeneration projects, and is committed to modernising Britain’s great cities as it aims to invest £15 billion.
Cllr Huw Thomas, Leader of the Council, said: “This is great news for Cardiff. A lot of work has been going on behind the scenes to make this a reality, and the announcement today underlines the fact that Cardiff is a great place in which to work and live. Cardiff is going head to head with all the major cities around the UK as we look to attract jobs and investment and this announcement shows we are getting things right.
“I am particularly pleased with how this decision brings further momentum to the redevelopment of the area around Cardiff Central. I have been clear from the onset about my determination to deliver this redevelopment, including a new Bus Interchange, and this decision represents an important part of that jigsaw.
“One of the key pillars of our Capital Ambitions for Cardiff is to address the fact that too many of our people are living in poverty. Bringing job opportunities to the City, as we are doing today, is a critical part of the solution to this challenging issue.”
Rhydian Morris, JLL director of office agency, who advised the GPU, continued: “This deal, the largest office leasing transaction ever recorded in Cardiff and Wales, is a significant milestone not only for our Capital but the wider economy.
“We carried out an extensive selection process taking in to account wide ranging considerations including cost efficiency. A major factor was connection to the rest of the country – Central’s Square’s location, a stone’s throw from the city’s main train station, gives fantastic accessibility which helped sway our client’s ultimate decision.”
Cllr Russell Goodway, said: “This decision reinforces the confidence that there now is in Cardiff generally and in the Central Square development in particular. Businesses and employers are seeing the Council taking the right decisions and creating the right conditions for businesses to thrive. It’s important because it strengthens Cardiff’s role as the main economic driver in Wales and it means the city will not only serve as a great capital city for Wales but will be an important British city in a European context.
“This demonstrates that the decision of the Heather Joyce administration in 2013 to make a reality of the decades old ambition to rejuvenate the area in front of Cardiff Central Station is having precisely the transformative impact on the city centre we believed it would. And it’s only a start. The new administration is working hard to ensure the south side of the train station goes through a similar rejuvenation and we are working with developers to draw up plans for the Brains Brewery site and adjacent land that will create an exciting new district in its own right. Coupled with our plans for the redevelopment of Dumballs Road, Cardiff will get a truly impressive river frontage which will generate new experiences and opportunities.”
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Notes to editors
Rightacres is a family owned business based in Cardiff and chaired by founder Michael McCarthy. Now run by his son Paul, Rightacres has developed over two million square feet of commercial space in Cardiff. Previous JV's include Callaghan Square in Cardiff with MEPC and the Holland House Hotel chain with Macdonald Hotels. www.rightacres.co.uk
LGIM Real Assets
LGIM Real Assets is a division of Legal & General Investment Management (LGIM), one of Europe’s largest institutional asset managers and a major global investor. LGIM manages £902bn in assets on behalf of over 3,200 clients (as at 31 December 2016), providing products and solutions spanning all asset classes. LGIM Real Assets, headed up by Bill Hughes, has AUM of £23.2bn (as at 31 December 2016), actively investing and managing assets across commercial property, private residential, infrastructure and property lending and, most recently, corporate credit.
Legal & General Retirement
One of Legal & General’s three major asset-based businesses, Legal & General Retirement (LGR) is responsible for £55bn of annuity assets (as at 30 June 2017). LGR has been an award-winning participant in the UK pension de-risking market for nearly 30 years, and also has operations in the US and the Netherlands. LGR provides pension annuities on an individual and bulk basis and is a major investor in long-term assets to match those liabilities. Legal & General’s strength and scale in investment management and expertise in longevity and mortality risk enables us to offer a range of de-risking solutions, including buyout, buy-in, longevity insurance and liability-driven investment (LDI) to pension schemes of all sizes.