Derwent starts to build net-zero carbon office

roperty developer Derwent London today said it has put spades in the ground to start a £400 million net-zero carbon office project in the West End, encouraged by improving market sentiment.

The FTSE 250 developer and landlord started construction on its Baker Street scheme on October 21.

It will be made using low-carbon concrete, and the building will run on an all electric heating and cooling system, with renewable electricity.

The site will comprise more than 200,000sq ft of offices, as well as shops and homes.

Derwent announced in 2020 it was planning to create the project speculatively, without having definite business tenants lined up, in the second half of this year.

Today Derwent’s boss Paul Williams said: “Improved market sentiment and higher levels of business activity have led to increased leasing demand and given us the confidence to commence the group’s next net zero carbon development at 19-35 Baker Street.”

A number of property investors have committed to new speculative office schemes, despite the popularity of working from home in many cases during lockdowns. A mixture of home and office hours post-pandemic is being embraced by various employers.

Developers are betting that occupier demand will be high for the most modern and environmentally-friendly sites.

That comes as potential tenants increasingly look at their environmental, social and governance (ESG) credentials.

The latest construction update came as Derwent said £5.5 million of new lettings have been agreed since the half year started in July. That brings year to date lettings to £9.4 million.

The firm added that rent collection is close to pre-Covid levels.

Shares in Derwent, which also said it has exchanged contracts to buy a long leasehold interest in a Southwark office block, improved 53p to 3415p.

Elsewhere in the sector today, investor UK Commercial Property Reit said it has exchanged on the £35 million purchase of West Gate, a 98,000sq ft office building on Hanger Lane in west London.