Schroder UK Real Estate Fund (‘SREF’) and Stanhope Plc have secured a major pre-let with the Government Property Agency for a new government hub in Croydon for the Home Office.
Following a 25-year lease being agreed at Two Ruskin Square, a new 330,000 sq ft building at SREF’s 1 million sq ft mixed-use development, planning permission has been granted for work that will combine the second and third commercial buildings within the scheme’s previous pipeline, due to the scale of space sought by the tenant. Work is anticipated to start on site this year, with a Cat A practical completion target of late 2023.
Two Ruskin Square will be the second Grade A office building to be completed at the nine-acre scheme, located adjacent to East Croydon station. This follows the letting of One Ruskin Square, a 183,000 sq ft Grade A office, to HM Revenue & Customs in 2017. Two further office sites have outline planning permission for an additional 500,000 sq ft.
Councillor Manju Shahul-Hameed, Croydon Council’s Cabinet Member for the Economy and Jobs, said:
“Croydon continues to be a place that attracts interest and investment from major employers despite Covid-19, and this latest office development will boost the local jobs market and other town centre businesses. I look forward to welcoming this new development as part of Croydon’s wider economic recovery.”
The long-term, inflation-linked lease commitment for Two Ruskin Square will strengthen SREF’s defensive income profile and, including the HM Revenue & Customs lease, amongst others, increases the proportion of SREF’s rental income from government tenants to approximately 19%.
Jessica Berney, Fund Manager, Schroder UK Real Estate Fund, commented:
“Ruskin Square has paved the way in Croydon for attractive, high quality office and residential space, conveniently located and fit-for-purpose, and this letting demonstrates that the scheme is still ticking all the right boxes. We are working closely with the new tenant to provide a bespoke workplace for employees and visitors that can be tailored around their current and future requirements. With a further two office and three residential buildings in the pipeline, Ruskin Square is sure to continue to be a focal point of Croydon’s reputation as a thriving London hub and winning location, with university teaching, transport connections and business and technology clusters.”
Configured over 10 floors, Two Ruskin Square has been designed by AHMM to deliver bespoke, flexible office space with sustainability and wellbeing central themes to the design. The building will adopt the Design for Performance initiative which aims to import the Australian energy rating system (NABERS) to the UK via a consortium of ‘Pioneer’ developers and partners.
A number of key sustainability design requirements will be incorporated into Two Ruskin Square, including an all-electric energy strategy, rainwater harvesting, a high performance façade, 35% green roof cover, a modular structural design to minimise embodied carbon, photovoltaics and a BREEAM Excellent target.
The design also includes an outdoor terrace space and bicycle spaces with lockers available for tenant use to promote active lifestyles and fitness, as well as three retail units located on the ground floor intended for use by convenience and local amenities to support the community-focused approach to the development.
David Camp, Chief Executive of Stanhope, added:
“This transaction is excellent news for Ruskin Square and for Croydon, which helps to cement its reputation as South London’s leading commercial growth hub. Working alongside our partners, Stanhope has driven the development of Ruskin Square for over 15 years and this news demonstrates the success of the long-term vision to revitalise this central area of Croydon. We look forward to welcoming the Home Office into this fantastic space which has been developed collaboratively with the Government Property Agency, with sustainability at its heart.”
SREF has signed up to the Better Buildings Partnership agreement and Two Ruskin Square is a great example of the fund being able to deliver on its sustainability targets.
The lettings at Ruskin Square demonstrate the London submarket opportunities within SREF’s portfolio, attracting good covenants to high-quality buildings, which also include One Lyric Square, Hammersmith, Wenlock Works, Old Street, and Dept W, Whitechapel. SREF has a resilient portfolio with income diversified across 679 tenants as well as defensive qualities including a long unexpired term compared to its benchmark.
Ruskin Square pipeline
Ruskin Square boasts dining and leisure destination Boxpark, a further 100,000 sq ft of retail and restaurant space and attractive public realm. Within the pipeline, a further 550,000 sq ft of office and educational accommodation is planned across two further commercial plots.
The first of four residential phases is now fully occupied. Delivered in partnership with Places for People, ‘Vita’ comprises 161 stunning apartments. A further 326 homes across three residential plots are consented – all with access to communal amenities and outside space.
Croydon is the third largest business hub outside of Central London and is supporting significant growth within the tech sector, attracting companies, incubators and accelerators within this space, as the town strives to be a world-class destination for growth, opportunity and innovation in the tech sector. Croydon has recently been named London Borough of Culture for 2023, fending off competition from across the capital. This will see events across the borough – and in Ruskin Square itself – to celebrate the borough’s rich and resilient artistic heritage, creativity and diversity.
Savills acted as the leasing agents on Ruskin Square.