LandSec says demand holding up despite rising rates

The company on Wednesday said occupancy in the its central London portfolio increased by 100 basis points to 96.9%, with £17m of lettings signed or in solicitors' hands.

In Victoria, which makes up nearly half of Landsec's central London business, the company's existing office portfolio is now 100% let, it added in a trading update.

The recently-completed development at n2 is now 80% let with the remaining 20% in solicitors' hands, while its Lucent building is 62% let with a further 14% or in solicitors' hands.

"Reflecting the strong demand, rents across both schemes are more than 10% ahead of initial assumptions," the company said.

Landsec added that it had now committed to the start of Thirty High - formerly Portland House - which is expected to complete in the summer of 2025. Total development cost for refurbishment of the building is estimated at £400m, with a gross yield on cost of 7.5% and a gross yield on the £240m capex investment of more than 12%.

"Over the past year, we have been decisive in positioning the business for a higher for longer interest rate environment. Our disposal of £2.2bn of mature, mostly single-let offices, predominantly in the City, before the start of this financial year has proven very timely," said chief executive Mark Allan.

" As such, we have flexibility to respond to the opportunities that will start to arise from the adjustment to a higher rate reality, as it remains clear that customer demand for the most sustainable, high-quality space in the best locations remains resilient."

Reporting by Frank Prenesti for Sharecast.com