Development Securities lands TfL housing deal

Development Securities is to become the first company to benefit from Transport for London’s new push to exploit its property portfolio, striking a deal to build more than 300 new homes above Southwark underground station.

The deal underlines how TfL, the body that runs London’s public transport network, is taking a more entrepreneurial approach to its property assets. The body is seeking to generate £1bn from new construction activity in order to help pay for upgrades to the capital’s railways and roads.

TfL is one of London’s biggest landowners, holding 5,700 acres across more than 3,000 sites and is seeking private sector companies to work with it on this major development programme.

The move into property development is a shift away from TfL’s previous strategy of selling sites off, and comes as Whitehall is trying to encourage public sector bodies to get better value from their landholdings. The government has also embarked on a programme of selling its own central London property assets.

Graeme Craig, TfL’s director of commercial development, said the Southwark deal was an “example of the work we are doing to maximise our assets whilst generating vital revenue that we can invest in the transport network”.

A planning application for the site will be submitted to Southwark Council later this year.

TfL first trialled its new approach last year by signing up Capital and Counties to redevelop a Tube depot as part of the London company’s wider Earl's Court mega-scheme, where nearly 8,000 homes will be built over a decade or more.

The Southwark contract is a standalone deal and not part of a 50-site portfolio which TfL will contract out to between three and six developers later this year. Francis Salway, the former chief executive of Britain’s biggest listed developer by turnover Land Securities, is advising TfL on the programme.

Last year Development Securities acquired regeneration specialist Cathedral Group, giving it additional expertise in urban residential development.

These skills will be necessary for the Southwark site, which includes a derelict office building and the empty space above the Tube station. This will pose an engineering challenge to keep the station running while building above it. The new scheme will also include shops and restaurants.

Development Securities previously teamed up with TfL on its Hammersmith Grove scheme, a former car park owned by TfL where the developer has built 277,000 sq ft of offices.

Julian Barwick, Development Securities’ executive director, said the Southwark site had “huge potential” to create new employment and housing.

Development Securities recently announced that its long-serving chief executive Michael Marx will retire later this year after 21 years at the company; executive director Matthew Weiner will take over.