Blackstone’s purchase of the “Can of Ham” skyscraper in London fails

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Blackstone’s £300m bid to acquire the Cane of Ham skyscraper in London has failed, the latest sign that sales of expensive office space remain stalled by disputes over the value of the buildings.

The American group, the world’s largest commercial real estate investor, was in exclusive negotiations to acquire the building with an offer of just over £300 million, according to people familiar with the process. But the seller, Novin, was not prepared to accept an offer below the asking price of £322 million.

The collapse of the talks, first reported by Green Street News, scuppers what would have been the biggest London office deal in two years.

BlackstoneAmazon’s willingness to bid on a large, high-quality office building is a positive sign for the office market after two years of exhaustion. Investment in London offices in the first nine months of the year was the lowest since 2003, according to the MSCI index.

But the price offered by the American group is lower than where many owners still rate their tower. One of the people said Novin was looking to improve the asking price.

The deadlock between investors on price suggests that buyers and sellers are not willing to make enough concessions to break the deal-making drought.

“There is a gap in price expectations between buyers and sellers…suggesting there is more to go before liquidity returns to the market,” MSCI analyst Tom Leahy wrote in a note.

Blackstone and Nuveen declined to comment.

Office vacancy rates in major cities rose after the crisis Covid-19 The pandemic and the increase in hybrid working, reaching a 20-year high of about 10 percent in London, according to data from Costar.

Demand for corporate office space is sharply divided, with competition for the best spaces with modern amenities and green credentials, but scarce interest in older or poorly located buildings.

The pork can at 70 St Mary Axe – named for its distinctive circular shape – was seen as a test of the demand for high-quality buildings. It is fully leased with long-term lease terms to tenants including law firm Sidley Austin, National Bank of Canada and Samsung Electronics.

Nuveen, the asset management arm of US firm TIAA, was the original developer of the 21-storey tower, which was completed in 2019. It previously attempted to sell in 2022 for around £400m.