Pembrokeshire-based property investment firm Second Horizon has acquired the freehold interest in 1 John Street, a 115,000 sq ft office building in Cardiff city centre that is entirely let to Lloyds, in one of the largest office investment deals outside London this year.
The building was sold by Cardiff-based developer JR Smart, which built the 10-storey scheme speculatively. Lloyds took occupancy earlier this month under a 10-year lease, and the property has capacity for 2,500 bank staff.
Lloyds' New Hybrid Working Hub
Lloyds said staff assigned to its new Cardiff office will be expected to spend around 40% of their working time in the building. Employees range from those in consumer lending and customer service roles to staff in the bank's insurance and pensions teams.
The new hybrid working operation has brought together Lloyds staff from its former Newport office and those who were based at St William House, a 144,000 sq ft building just yards away. Earlier this year, St William House was acquired from its owner, Schroders, by Cardiff and Vale College.
Deal Details and Advisers
The investment was marketed by property advisory firm Knight Frank with an asking price of £38.4m. Handelsbanken provided funding for the purchase, with legal advice from Hugh James. The vendor and buyer were represented by Robertsons Solicitors and JCP Solicitors respectively.
David Marshall, head of real estate finance at Hugh James, led on the purchase, supported by Iwan Jenkins, a partner in the firm's construction team. Illtyd Francis is branch manager of Handelsbanken's Swansea branch.
Market Context
1 John Street is the last speculative grade A office scheme to be built in Cardiff since completion of the office element of the interchange scheme at Capital Square, which now serves as the Welsh headquarters of financial services firm Legal & General. The city currently has no pipeline of new grade A office buildings.
With high interest rates and construction costs, any new development would need tenants willing to pay rents potentially well north of £40 per sq ft to be commercially viable. The current headline rent for the city is £33.50 per sq ft. To complete its John Street project, JR Smart secured a £15m repayable loan from the Cardiff Capital Region's Strategic Premises Fund.
