A retail destination

Bringing a retail destination to The O2 Arena

02 January 2019
A photo of AEG

Some 265,000 people attended the ATP world tennis finals at The O2 in London during November 2017, and not one of them was aware of the construction project going on around them in the entertainment complex.

Fast forward a year and a new 210,000 sq ft urban outlet centre opened its doors at The O2, bringing retail to the leisure destination for the first time. The Icon Outlet is home to brands like Ted Baker, Calvin Klein and Hackett, and will boast 80 stores, thanks to a collaborative Joint Venture (JV) between Crosstree Real Estate Partners and AEG.

AEG redeveloped the original Millennium Dome site opening The O2 back in 2007, and has long been working on a plan to develop a retail destination around The O2 Arena, with Burges Salmon as the company’s long-term construction adviser.

In 2015, AEG signed the JV with Crosstree and the JV appointed the Burges Salmon team led by partner Marcus Harling to advise on the project.

'This development project was hugely exciting for us,' says Sarah McGuigan, Chief Legal and Development Officer at AEG Europe. 'This is the world’s most popular music and entertainment venue, with nine million customers visiting each year, and since we opened the doors in 2007 we have had this area of undeveloped land that had yet to find its full potential.'

She explains that Marcus and his team played a key role: 'Having worked with Burges Salmon for many years on the construction side, it was hugely important for us to work with Marcus and the team, because they know us well and they know the building – a busy and unique site. We involved Marcus from the outset of the project, and his advice shaped our approach to the building contract tendering process and the building contract itself.'

At the same time as the retail development, The O2 was also undertaking a 50,000 sq ft cinema extension and construction of a 30,000 sq ft trampoline park, alongside running a packed schedule of regular events.

Marcus says: 'It is a pretty complicated site, because The O2 sits above the Blackwall Tunnel, which brings up an interface with Transport for London. The Arena continued as an operating events venue all the way through and required that there be no disruption at all on event days.'

The Burges Salmon team also worked on the construction side of the borrowing arrangements with Lloyds Bank Commercial Banking, which extended a £185 million facility to partly finance the development. At that point in time, that was Lloyds’ largest post-crash real estate funding: 'That was a mission-critical task,' recalls Marcus, 'to bring the funder along with the direction of travel of the project.'

Sarah concludes: 'One of the things I always enjoy about working with Burges Salmon is the team’s commercial, very pragmatic approach. We were able to pass through those negotiations with lenders and contractors in a way that maintained the good working relationships that were so vital to getting the project through to completion.'

The new retail development will add another layer to The O2 experience, encouraging concert-goers and sports fans to spend longer at The O2 and boosting footfall during the day before evening events. Phase two of the development will add further retail stores, bars and restaurants and the extended Cineworld cinema, and will open in 2019.

One of the things I always enjoy about working with Burges Salmon is the team’s commercial, very pragmatic approach.
Sarah McGuigan, Chief Legal and Development Officer at AEG Europe

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