UK's Landsec increases bet on mixed-use properties with MediaCity deal

By Aby Jose Koilparambil

(Reuters) - Britain's Land Securities has announced its second acquisition in the mixed-use property sector in a week, betting on growing demand for sites that combine commercial and residential spaces in the wake of the COVID-19 pandemic.

Landsec said on Wednesday it had bought a 75% stake in Greater Manchester-based MediaCity, the UK's biggest tech and media hub outside London, for $580 million. The deal came two days after it announced the purchase of regeneration firm U+I for $260 million.

Many UK landlords are looking to diversify into mixed-use properties as the pandemic erodes the valuations of retail and office spaces.

Landsec Chief Executive Mark Allan said the company's mixed-use portfolio would surge five-fold from present levels to represent 20%-25% of its overall portfolio in the next four to five years.

"There's more desire from people to have more of that immediacy within their local area rather than having to travel a long way to work," Allan said in an interview.

"Mixed-use neighbourhoods are becoming increasingly important in terms of the fabric of cities."

MediaCity, a 37-acre waterside property that houses the offices of BBC North, ITV and Ericsson, also includes residential, leisure and retail spaces.

The property was a 50:50 joint venture between Legal & General and Peel L&P, which will now retain a 25% stake and serve as an asset and development manager.

Allan said office utilisation at Landsec properties today was still only around 45%. By spring the number of people in central London at any point in time would still be some 20% below pre-pandemic levels as people adopt hybrid working models, he added.

($1 = 0.7322 pounds)

(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Ramakrishnan M. and Jan Harvey)