Urgent: Blackstone’s $427M Bid for London’s Can of Ham Tower Fails!
Nuveen Rejects Offer, Eyes Higher Value in Booming Market
In a dramatic twist in the London real estate scene, Nuveen, the owner of the iconic "Can of Ham" tower at 70 St Mary’s Axe, has turned down a hefty $427 million offer from private equity giant Blackstone. This rejection of Blackstone’s latest bid, equivalent to roughly 330 million pounds, underscores Nuveen’s bold bet on an improving appetite for premium European office properties. With the City of London’s office market showing signs of resilience amid shifting work patterns and rising interest rates, this high stakes standoff is being closely watched as a litmus test for the European commercial real estate sector. The 21 storey building, a standout in London’s skyline, has become a focal point for investors seeking to gauge whether buyers and sellers can bridge the valuation gap that has plagued office sales since the pandemic.
The "Can of Ham," officially known as 70 St Mary’s Axe, is no ordinary property. Completed in 2019 and designed by Foggo Associates, this Grade A office tower spans approximately 300,000 square feet and boasts a BREEAM Excellent rating, making it a top tier asset in the City of London. Fully leased to prestigious tenants like law firm Sidley and energy company Vattenfall, its prime location near Liverpool Street station and the Crossrail terminal enhances its appeal. Blackstone’s pursuit of this trophy asset began with a $388 million offer (around 300 million pounds) in December 2024, which Nuveen swiftly rejected as it fell short of their $417 million asking price (322 million pounds). Undeterred, Blackstone upped the ante to $427 million in March 2025, surpassing Nuveen’s initial target. Yet, Nuveen, buoyed by robust leasing demand and a resurgence of cash flowing into European real estate, held firm, signaling their belief that the building’s value could climb even higher.
Market Dynamics Driving the Standoff
This rejection comes against a backdrop of a complex and evolving London office market. Analysts note that while leasing activity in Central London remains strong, with take up reaching 9.68 million square feet in 2024 according to Cushman & Wakefield’s Q4 2024 report, the investment landscape for large office buildings tells a different story. Prime rents have soared by 7.8% to £155 per square foot, reflecting a hunger for high quality spaces, yet transaction volumes for big ticket office properties have dwindled to their lowest since 2009. High interest rates, hybrid working trends, and economic uncertainty have made investors cautious, creating a pricing deadlock that has stalled deals like Brookfield’s Citypoint tower sale, which faltered when bids fell short. Nuveen’s refusal to settle for $427 million suggests they’re banking on a supply crunch, driven by limited new construction, and a gradual return of workers to offices to push valuations upward.
Nuveen’s strategy isn’t new, they’ve tested the market before. In 2022, they aimed to offload 70 St Mary’s Axe for $518 million (around 400 million pounds), but interest was tepid amid post pandemic uncertainty. Fast forward to 2025, and the firm appears emboldened by signs of recovery, robust leasing at the "Can of Ham" and a broader influx of capital into European assets have shifted their expectations. A source close to the matter revealed that talks with Blackstone broke down purely over price, with Nuveen now eyeing a figure closer to their 2022 aspirations. This gamble could pay off if market conditions align, but it also risks leaving the property unsold in a climate where large office sales remain rare.
Valuation Insights: What’s the "Can of Ham" Really Worth?
To unpack this pricing saga, a deeper look at the building’s valuation is warranted. Assuming an average rent of £150 per square foot across its 300,000 square feet, the annual rental income clocks in at £45 million. Factoring in operating expenses, estimated at 25% of rental income, the net operating income (NOI) lands at £33.75 million. Applying a capitalization rate of 5.75%, typical for prime City of London offices per BNP Paribas’ Q4 2023 insights, the property’s value could reach $760 million (approximately 586 million pounds). Yet, Nuveen’s original $417 million asking price implies a cap rate of 10.48%, far higher than market norms, hinting at either a conservative buyer outlook or unique risks tied to the asset. Blackstone’s $427 million bid, while above the asking price, still falls short of this theoretical ceiling, highlighting the valuation chasm at play.
This table lays bare the disconnect, Nuveen’s rejection of $427 million aligns with a belief that the market will eventually recognize a lower cap rate and higher value, closer to $760 million. Meanwhile, Blackstone’s bids reflect a more cautious stance, possibly factoring in interest rate pressures or longer term shifts in office demand.
Broader Implications for London’s Office Market
The "Can of Ham" saga mirrors broader trends in London’s commercial real estate landscape. Comparable sales, like One Southbank Place at $518 million and Citypoint’s stalled $647 million target, peg top tier office buildings in the $388 million to $647 million range. At $417 million, Nuveen’s initial price sat comfortably within this band, yet their upward revision suggests they see 70 St Mary’s Axe as a standout asset worth more. This optimism is fueled by a tightening supply of new Grade A offices and growing investor interest in premium properties, as companies nudge employees back to in person work. However, the scarcity of completed large office deals, with Brookfield’s struggles as a cautionary tale, underscores the market’s fragility.
For Nuveen, the decision to hold out could prove prescient if London’s leasing strength translates into investment gains. The "Can of Ham" benefits from full occupancy and a prime location, positioning it as a jewel in the City’s crown. Yet, the longer they wait, the more they risk a shift in sentiment, should economic headwinds or remote work trends dampen buyer enthusiasm. Blackstone, meanwhile, may regroup and return with a higher offer, or pivot to other opportunities in a market flush with potential but short on consensus.
What’s Next for 70 St Mary’s Axe?
As of now, 70 St Mary’s Axe remains in Nuveen’s hands, a gleaming symbol of London’s evolving office market. The rejection of Blackstone’s $427 million offer has sent ripples through the industry, spotlighting the tension between seller ambition and buyer caution. Whether Nuveen’s bet pays off hinges on the trajectory of European real estate demand, with all eyes on London’s ability to sustain its leasing momentum. For investors and analysts alike, this unfolding drama offers a front row seat to the high stakes game of valuing premium office space in a post pandemic world, where every million counts and timing is everything.
Key Citations- 70 St Mary Axe Wikipedia page
- Blackstone's higher $427 million offer rejected
- Landmark London office tower sale falls through
- Central London Office Market Report Q4 2024
- Central London Office Market Update Q4 2023
- Large London office buildings hard to sell article
- London skyscraper sell-off news article
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