String of big deals resurrects commercial property sector

The commercial property market's return to strength was confirmed yesterday by a clutch of deals, including a pounds 59m purchase by Great Portland Estates, and a report that John Ritblat's British Land was planning the West End's biggest development in decades. Yesterday's announcements follow a raft of surveys showing improvements in letting activity and a return to the speculative development schemes that companies had shunned since the last property boom.

Great Portland's acquisition of Ilex, a privately owned property investor, brings the company's spending since February's pounds 97m rights issue to pounds 100m. Ilex's two main assets are long leaseholds on the Bond Street properties Clarendon House, a 36,700 square foot development of retail and office space, and Bond Street House, a 29,500 square foot development.

But the strongest sign so far of improving confidence in the central London property market has been provided by British Land's John Ritblat, who has laid out plans for a 2 million square foot scheme at its Euston Centre site. Original plans for the development were for a scheme only half as large.

He launched the latest phase of the development this week, a building that has been half let to the First National Bank of Chicago, with a bullish assessment of its prospects: "If you look at the site then it is a very realistic proposal. It has the best transport links in London with five underground stations within easy walking distance, excellent access to Heathrow Airport and it will soon have the Eurotunnel link at St Pancras. I do not know of a better location in London."

His enthusiasm matches the optimism expressed recently by a wide range of property developers, including Hammerson, which has announced ambitious plans to redevelop the Bull Ring shopping centre in Birmingham, and Chelsfield, which is stepping up plans to develop the area around Paddington Basin.

British Land is also active in the City, where it owns the Broadgate office complex around Liverpool Street station and has submitted extensive plans to redevelop its long-term holding Plantation House on Fenchurch Street.

After years in the doldrums, the property sector has sprung to life again this year, with many developers from the last property boom returning to the market and big deals, such as the aborted takeover of MEPC by Hammerson, being mooted. For the first time in years, quoted property companies are trading at premiums to the underlying value of their assets.

Other smaller deals in the sector announced yesterday included the acquisition by Persimmon of 23 acres of building land near York for pounds 6.3m, the sale by Edge Properties of a Darlington retail warehouse to Scottish Amicable for pounds 3.45m and the purchase by McKay Securities of a portfolio of properties from General Accident for pounds 8.6m.