Lincoln MGT, the joint venture between Lincoln Property Company and MGT Investment Management, has completed the first 115,000 square feet of office lettings at its £850 million mixed-use Station Hill development in Reading, CoStar News can reveal.
The deals, first tipped by CoStar News in January, take One Station Hill to over 40% let ahead of practical completion in mid-October.
PepsiCo will take 38,255 square feet across floors 7 and 8, and a private terrace of 3,853 square feet. Professional services company PwC has signed for 41,954 square feet across floors 5 and 6. NewFlex, the flexible offices operator, will take 31,765 square feet (2,951 square metres) of space across floors 1 and 2.
PepsiCo is consolidating its existing office space, which is on the edge of Reading at Green Park, to the town centre building, while PwC is moving from premises a short walk away. The space will be NewFlex’s first workspace in Reading and the company is touring potential occupiers for an October start.
One Station Hill, designed by architect Gensler, is directly opposite the railway station and is a key part of major redevelopment plans for the town centre. The office building is arranged across lower ground and ground floors and fifteen upper floors, with terraces on floors 8 and 15.
The development has a number of facilities, including rooftop yoga, set in two acres of landscaped public realm and improved pedestrian access. It is an all-electric building using air source heat pumps and smart building technology, and targets BREEAM Outstanding certification, a Platinum WELL score and an EPC A rating.
Further details of the terms have not been disclosed but market sources have said the letting to PepsiCo on the highest floors is at around £56 per square footwhile PwC has signed for closer to £54 per square foot, record rents for Reading. It is thought they have signed 12-year leases.
One Station Hill forms part of a 2.5 million-square-foot mixed-use development, which includes a total of 625,000 square feet of offices and up to 1,300 homes, 598 of which have already been built in the neighbouring Ebb & Flow development. The project also includes 95,000 square feet of retail and leisure space.
This autumn, the joint venture will connect Friar Street to the station via pedestrianised public realm.
In 2021, Lincoln MGT secured a £107 million construction loan from BentallGreenOak for the second phase at Station Hill. The loan is funding the offices, a public square and a link bridge with level access from the train station to the town centre. The development includes a £50 million investment in surrounding infrastructure.
Evan Reynolds, development director for Lincoln, and on behalf of the JV, said in a statement: “For over 20 years, the Station Hill site remained undeveloped, leaving a significant gap in an area that should welcome those arriving in the capital of the Thames Valley – until now.
“The commitment from three tenants of this calibre, for terms exceeding 10 years, speaks volumes about the positive impact of well-executed town centre regeneration. Each tenant has embraced our vision that the workplace should be a destination – a best-in-class workspace with premium amenities, easily accessible and set in a fully curated environment. Only by providing all of these can we truly say that One Station Hill is setting the new standard for Grade A office development.”
Steve Jude, chief executive of NewFlex, said: "Given that it supports more than 15,000 businesses ranging from start-ups to globally recognised brands, Reading has solidified its reputation as a premier international business hub, particularly in the science and technology sectors. As one of the fastest-growing urban economies in the UK – bolstered by the strong impact of the Elizabeth line and the rapid link this provides to London – Reading stands as a pivotal destination for ambitious businesses."
Tom Fletcher, director, Hatch Real Estate, said: “Following a slow 2023, the Thames Valley office market is in resurgence in 2024. With over 280,000 square feet of office take-up so far and a further 150,000 square feet-plus under offer, we’re well on track to comfortably exceed the long term average for Reading.
"We're now experiencing a new polarisation of the office market – the stark difference between traditional Grade A and a new super prime quality being One Station Hill. Furthermore, not only are there no new development or refurbishment starts in the pipeline, general supply in the town centre is dwindling as buildings like Abbey Wharf, amongst others, are expected to be converted to residential. Having helped acquire the Station Hill site for Lincoln MGT 6 years ago, we’re delighted to be exceeding on the advice given at that time, and excited about [practical completion] of One Station Hill in October and phase 3 coming forward.”
Stuart Austin, head of South East office markets, JLL, said: "The calibre of the tenant mix secured by the first lettings at the building is the best possible platform for the future performance of the building."
JLL and Hatch Real Estate are advisers at Station Hill. Cushman & Wakefield is advising PwC. Colliers is advising PepsiCo.
The office lettings are a crucial milestone for a South East site that struggled to get off the ground for decades. Station Hill includes the area outside of Reading Station, incorporating the Garrard Street car park and the site of the old Friar's Walk Shopping Centre.
Lincoln MGT took on the project in 2018. It is understood to have paid around £68 million for the opportunity with backing from Baupost.
In January 2011 the Station Hill development was bought by private equity firm Benson Elliot and Stanhope after long-term owner Sackville sold a majority stake in the scheme, but retained a small interest.
Their plans replaced long-running plans from Reading tycoon John Madejski’s Sackville Developments for a 1.7 million-square-foot scheme comprising a 22-storey tower, 870,000 square feet of offices, 243,000 square feet of retail and leisure and 650 flats which obtained planning consent in September 2010.