John Lewis has been forced to delay its plans to raise £150m by selling a portion of its flagship store on Oxford Street due to turmoil in the commercial property industry.
The retailer had chosen a joint venture between developer Hines and Korea’s National Pension Service as the preferred bidder for the project to convert the upper floors of the building into offices, according to The Sunday Times.
The bidders were reportedly prepared to pay £150m for the portion of the building, which was expected to be worth as much as £750m once developed into offices.
However, the deal has been derailed by rising interest rates and falling property values. John Lewis has not abandoned the project, but it has been delayed.
Meanwhile, developers are becoming more cautious about committing to major projects in London’s West End due to a decision by housing secretary Michael Gove to block Marks & Spencer’s attempts to demolish and rebuild its Oxford Street store.
Last week, M&S filed a legal challenge to the decision.
According to The Sunday Times, a source close to John Lewis said that its scheme was not comparable to the M&S one because it involved conversion, rather than rebuilding.
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