Case Studies

72 Welbeck Street, London

Purchased in August 2001 for £36.5 million. Created 38% more usable office space. Number of apartments increased from 11 to 23. Sold in December 2005 for £95 million. Annualised Investor IRR 21%.

This late-1970s building with 55,000 sq ft of office/retail space and 11 apartments on the top floor begged two questions: ‘Why is the light well so massive?’ and ‘Can we make it smaller?’

Market opportunity

To develop a structural solution to reduce the size of the light well to substantially increase the amount of office space and residential accommodation and achieve a huge uplift in value.

Strategy

We purchased the building through a joint venture with Morgan Stanley Real Estate Fund. In Westminster, every square foot of additional office space must be matched by the same amount of residential accommodation. Our application to reduce the light well’s size to increase the office space from 55,000 to 76,000 sq feet therefore included a proposal to add an additional floor of apartments to the building. The complex structural alterations involved completely modernising the interior and exterior, constructing two new cores and new services, and replacing the original three small entrances with two larger entrances to provide separate addresses for the apartments and offices. The building was finished on time and on budget. The second, third and fourth floors were leased to UBS in what was believed to be one of the largest deals in the West End in 2005.

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