Legal & General have drawn up plans to turn the giant House of Fraser in Birmingham into offices and a hotel after seeing the value of the property and its rental income fall sharply. The proposals to transform the former Rackham’s buildings, which are located between Temple Row and Corporation Street, are being prepared for submission to Birmingham City Council later this month.
The plans include a complete redevelopment to provide nine floors of office space, a 75,000 sqft hotel, a rooftop terrace, as well as bars, restaurants and retail space. The new offices would be accessed through a redesigned entrance area that would act as the hotel lobby and house a full height atrium and informal co-working space.
L&G agreed a temporary lease for the 490,000 sq ft property, following the sale of House of Fraser to Sports Direct in August, in order to keep the store trading. House of Fraser is understood to be paying just 20% of the previous rent as a result of this agreement.
The value of the property has also fallen sharply. L&G acquired the Rackham’s buildings from British Land in 2015 for £71.4m and then bought the neighbouring building, 43 Temple Row, from The Crown Estate for £14.5m later that year. The two properties were valued at between £90m and £100m at the end of last year but their value had fallen to between £60m and £70m at the end of September.
Simon Wilkes, head of business space development at L&G said “In addition to providing a most welcome increase in the availability of Grade A office space to help meet growing demand in the city, these proposals will create a new cluster of attractive food, drink, retail and leisure facilities right in the city’s core.
“Rackham’s is one of the best situated buildings in Birmingham and we are very confident that its transformation with updated design and facilities, innovative range of uses and quality of materials will quickly attract new occupants, eager to benefit from the great potential of this wonderful space.
“This unique mix of uses and positive enhancement of what is one of the city’s most familiar properties will bring added vibrancy to the centre of Birmingham, bringing additional jobs and attracting more visitors.”