Basingstoke: Major HQ pre-let landed in biggest such deal for seven years
Basingstoke and Deane Borough Council’s cabinet has approved the proposed terms of the deal which will secure the company’s future in the town.
The commitment from Lilly to stay in Basingstoke would see the company move to a new pre-let Grade A office building in Basing View, as part of the ongoing multi-million-pound council-led regeneration of the central business district.
The 45,000 sq ft office building will be constructed as part of the borough council’s partnership with Muse Developments at a cost the council has capped at £23.1 million including fees, according to council documents. Once completed the building will be owned by the borough council, bringing in additional rent to help fund council services, the council said.
The new offices are targeting BREEAM very good standard.
Essential levelling work on the land to enable construction work to begin has secured £4.5m funding from the Enterprise M3 Local Enterprise Partnership, as part of its commitment to enabling sites for development to boost economic growth in the town.
Under the proposed deal, Lilly’s out-of-town Priestley Road Campus, which no longer meets the needs of the international pharmaceutical company will be freed up for brownfield regeneration. The council plans to sell the site to Lilly for redevelopment once the company has moved into its new offices in Basing View in approximately two years’ time.
According to council papers, Eli Lilly approached the council to negotiate terms on a significant land deal the basis of which would involve the firm :
- surrendering the current lease at the Priestley Road Campus
- taking space from the Council at Basing View in a new 45 000 sqft building forward-funded and owned by the Council, delivered by the Council’s development partner, Muse.
- acquiring the freehold of the Priestley Road Campus for future redevelopment for employment or residential use
The Priestley Road Campus comprises of an office building, data centre and sports and social club that total 146,500 sq ft on a site of circa 9.6 acres.
There are two separate head leases that both have unexpired terms of 124 years. The total current passing rent is £443,900 per annum.
Eli Lilly proposes to surrender the above leases subject to Eli Lilly leasing a new Grade A office building of circa 45,000 sq ft on Basing View. The advice from the council's retained adviser Cushman and Wakefield is that these represent market terms and, in particular, the rent free period is appropriate.
The deal would involve Eli Lilly surrendering the leases on the Priestley Road Campus, leasing from the Council a new Grade A office building of circa 45,000 sq ft (comprising 41,707 sq ft of offices, 2,310 sq ft of ground floor retail and a reception area of 950 sq ft) on Basing View which will be forwardfunded and owned by the council.
On completion of the lease of the new office building the council will sell the freehold of the Priestley Road campus to Eli Lilly who will then dispose of the site for re-use or redevelopment as appropriate.
Eli Lilly would leaseback the Priestley Road campus to maintain local operations pending the completion of the proposed new office building.
Cabinet member for property and development at Basingstoke and Deane Borough Council John Izett said: “This pre-let demonstrates Basingstoke’s renewal as an office market on the M3. We are able to offer Lilly good value first-class office space.
“The pre-let building is adjacent to the new 60,000 sq ft Florence building which is currently under construction and to let and together they strengthen Basingstoke's position as a key destination for businesses in the south east.”
Rebecca Morison, vice-president and general manager at Lilly UK and Northern Europe, said: “I’m delighted that plans for Lilly’s move to a modern, purpose-built office at Basing View have been approved by the council.
“Lilly has a long-term commitment to the Basingstoke area, where we have been based since the 1940s, and the UK remains an important location for Lilly’s global business.”
John Robinson, development director at Muse Developments, said: “This is a very positive development for Basing View and is a testament to its ideal location adjacent to existing retail, leisure and public transport, as well as close proximity to the motorway network and access to a skilled labour pool. We look forward to working with the council to deliver first-class, efficient and modern new office accommodation for Eli Lilly and Company."
JLL and RARE advised Muse and Basingstoke council at Basing View.
Source: CoStar
