Allianz Real Estate, acting on behalf of several Allianz group companies, has formed a joint venture between Allianz and Aviva Investors, the global asset management business of Aviva, to develop two Grade-A, prime office buildings in the City of London. The assets – 1 Liverpool Street and 101 Moorgate Street – have a gross development value (GDV) of approximately GBP 500 million and are located by both entrances of the Crossrail Liverpool Street station in the City and is expected to complete by Q4 2024.
1 Liverpool Street will offer 176,000 sq ft of modern office space and 101 Moorgate Street 72,600 sq ft on land plots secured under long leasehold structures with government body Transport for London (TfL). Aviva Investors originally entered into a development agreement with TfL in 2019 to build the mixed-use retail and office buildings. The firm will be the development manager for the construction of the two properties.
Each of the buildings will meet the Carbon Risk Real Estate Monitor (CRREM) decarbonization pathway, be compliant with EU Taxonomy, and are targeted to achieve Green Building Certification BREEAM ‘Outstanding’ status. Allianz Real Estate is part of the Net Zero Asset Owner Alliance and Allianz Real Estate has a target to reduce carbon emissions across its portfolio by 25% by 2025 and be carbon net-zero by 2050. Last year, Aviva Investors published a Net Zero Pathway outlining how it aims to reach net zero emissions across the whole of its Real Assets platform by 2040.
London has become a major driver of growth for Allianz Real Estate. The city ranked first overall in its Cities That Work 2021 European office sector report. It came out significantly ahead in the analysis, despite the impact of Brexit, ranking first for global city status and human capital.
Major office deals for Allianz Real Estate in London over the past 12 months include its first equity investment in the West End through a 75% interest in a three-building portfolio owned by British Land for EUR 450 million; and the redevelopment of Stonecutter Court in Farringdon, a 13-storey, 250,000 sq ft prime asset, in a joint venture with Ivanhoé Cambridge.
Allianz Real Estate believes prime office assets located in tier 1 cities such as London will remain in very strong demand in a post-Covid world though buildings will need to reflect a more tech-driven and ESG-centric tenant mindset. The office sector accounted for 51% of the firm’s AUM, or EUR 42.4 billion, as at the end of December 2021, with European allocation at EUR 31.3 billion.
Kari Pitkin, Head of Business Development Europe at Allianz Real Estate, said: “London is one of the world’s most dynamic cities and one of the most important office markets. This development will result in two exceptional office buildings in London. We strategically picked the micro locations in the City of London with direct access to the Crossrail transport service as we continue to build up our London office portfolio.”
Nicole Pötsch, Head of Investment and Strategic Development for North & Central Europe at Allianz Real Estate, said: “Aviva Investors is a like-minded, long-term investor with a strong track record in development and we are delighted to be working with them on this core project. Working closely with Aviva Investors, we have been able to optimize the ESG profile of both buildings at a very early stage, focusing on underlying factors such as technology, energy usage and the ‘smart’ aspects of each asset so they meet the new needs of tenants.”
James Stevens, Head of Real Estate Investment at Aviva Investors, said: “The scale of development we are undertaking at Liverpool Street and Moorgate signals our continued commitment to the city and its long-term prospects. We are really pleased to be partnering with Allianz Real Estate, a firm which shares both our investment philosophy and our focus on sustainability. This joint investment will deliver an exceptional example of our development strategy in action. We have set stringent sustainability targets, aiming to lower ongoing energy needs through use of efficient materials and specific performance targets. This will make 1 Liverpool Street and 101 Moorgate buildings of the highest quality for their occupants and further facilitate a move towards a lower-carbon future.”
