Tesco pension scheme assumes £30m cost of Cambridge office development
UK – Tesco Pension Fund (TPF) has agreed to fund the entire a new office development in central Cambridge at a cost of £32m (€37m) to the UK supermarket's scheme.
Twenty Two Station Road, a five-storey building close to Cambridge's rail station, is part of a new generation of office buildings in the new CB1 quarter being planned by Brookgate, a property development and investment company based in the city. The development as a whole is aimed at attracting and retaining major Cambridge employers.
The development is over 90% pre-let to tenants Mott MacDonald, the Cambridge-based international management, engineering and development group, and regional law firm Birketts at average lease lengths of over 20 years.
The scheme will be developed jointly by Tesco Pension Fund and Brookgate, with construction starting this month, and practical completion in March 2015.
Chartered surveyors John Miles advised TPF on the deal.
Around 10% of TPF's £7.3bn portfolio is allocated to property.
Jenny Buck, head of property at Tesco Pension Investment, said: "This investment is in line with our strategy to purchase well-located, high quality property assets in growth centres like Cambridge.
"We were attracted to the growth potential of Twenty Two Station Road, given the regeneration of the Cambridge station area, as well as the quality of the building and its tenancy profile."
Sven Topel, chief executive, Brookgate, said that TPF had joined a growing group of leading investors at CB1.
He said: "As a locally-based developer, we recognise that CB1's ability to accommodate these modern office requirements is an important factor in Cambridge's regional, national and international competitiveness."
The CB1 masterplan creates a new gateway to Cambridge, and will provide 600,000sqft of commercial space, 630,000sqft of residential space and 1,000 student rooms, plus retail, restaurants and bars.
The first office building in the development – Twenty One Station Road, the European headquarters of Microsoft Research – was recently completed.