Skanska Tapped to Build 560,000SF Office, Retail Project in London

Swedish construction company Skanska has been tapped to build a nearly 560,000-square-foot office and retail property in London on behalf of real estate firm Minerva. Skanska’s contract is valued at approximately $300 million.The project, St. Botolphs, will take the shape of a 14-story tower featuring upscale commercial offerings. With prep work underway at the 1.25-acre site, Skanska expects to wrap up development in 2010. Kansas City, Mo.-based global insurance broker Lockton International signed a lease for 84,000 square feet at the building for its European headquarters. The anchor tenant will lease the space for $88 per square foot, which is a deal in the market. Average net effective rents in the city, as per research by estate services firm Knight Frank, averaged approximately $116 per-square-foot at the close of last year. St. Botolphs is just one of a handful of projects that have brought Skanska and Minerva together over the last several years. Presently, Skanska is in the midst of constructing Minerva’s 445,000-square-foot Walbrook office and retail building in London.The call for Class A office space in Central London remains quite strong, according to a fourth quarter 2007 report by real estate services firm Jones Lang LaSalle, with vacancy rates averaging 2.6 percent, a notable decrease from the year-end 2006 rate of 3.2 percent. Business changes as well as lease breaks and expirations are significant contributors to the ongoing demand.