We can fill gap in City market with One New Change mall, says Land Securities chief

Land Securities' £540 million bet to build a shopping mall in the City in the depths of the financial crisis looks like it is paying off.

The One New Change shopping centre near St Paul's Cathedral opened last week with tenants in 99% of its stores, and the property firm's chief executive Francis Salway today said his company will reap the benefits of its perseverance.

One New Change, in Cheapside, has 220,000 sq ft of retail space and 330,000 sq ft of offices — within 10 minutes' walk of 112,000 of the City's 340,000 workers, according to Land Securities.

Salway believes he has the property to prise City workers into shops instead of spending their lunch hours shopping on the internet.

"We saw a gap in the market where nobody had tried to tackle the need for retail space in the City with any real ambition," Salway said. "We are opening the retail element of the scheme 99% let, which I think has surprised a number of people and demonstrates why we should be confident."

Land Securities has secured major retailers such as Next, Marks & Spencer and H&M, and Salway outlined good levels of tenant interest in the remaining 220,000 square feet of offices at the Jean Nouvel-designed building.

"If you can deliver commercial projects in some of these more historic locations, their commercial success is more assured," Salway said. "It's hard work but there is a certain cachet that goes with the projects and that helps on leasing."

Land Securities stopped chasing lettings as rents plunged, after pre-letting a third of the office space in 2007, but is back in the market when the availability of prime new space for rent is close to an all-time low.

"Now we are looking at higher rents and tighter rent free periods that combined will generate 20% better returns than we would have secured in June 2009," Salway said.

Salway would not disclose the value of the One New Change development, but one analyst suggested a £370 million figure, even though it is still about 40% unlet.

Land Securities' shares were 0.5% down at 671p this afternoon.