Network Rail to sell off commercial property business

Businesses created in railway arches at Old Union Yard in Southwark, south London

Businesses created in railway arches at Old Union Yard in Southwark, south London

Network Rail has announced the sale of its commercial property business in England and Wales. The majority of properties will be sold on a leasehold basis, reflecting that access to these properties will be required for the future operation of the railway.

Private bidders are being sought to purchase Network Rail’s commercial estate portfolio, which is expected to create a significant injection of cash to the taxpayer-owned railway infrastructure company as it focuses investment on passenger benefits.

The sale has been agreed across Network Rail and Government. The sale is being handled by Rothschild & Co.

Network Rail said it has decided to sell the commercial estate business because regards it a non-core property asset which is not essential for the running of the railway. Network Rail said divesting itself of the business will enable it to focus on its core business of improving passenger experience, running a railway and help fund its upgrade plan.

Network Rail’s commercial estate is a profitable and successful asset portfolio. Most of the 5,500 properties in the portfolio up for sale in England and Wales – the majority of which are spaces in railway arches – will be sold as leasehold with Network Rail retaining the freeholds to ensure access rights continue unaffected. Network Rail said these protections will mean the safe and efficient operation of the railway remains now and into the future, and have no impact on the daily operation of the railway, its safety or on future upgrades.

The business is the largest provider of small and medium-sized business space in the UK. Current tenants will transfer to the new buyer with their existing leases and notice periods unchanged. Network Rail anticipates that sale of the commercial estate business will see a new owner invest more money into the properties. It also believes that “considerable potential” exists to develop unused spaces to allow local businesses to grow and jobs to be created.

Network Rail is talking with existing tenants, staff and other stakeholders, who are being provided with information on the decision, impacts and next steps.

Mark Carne, Network Rail’s chief executive said: “This deal will bring more investment into the commercial estate for the benefit of the local communities and it will help fund a better railway. I hope to see areas around the railway positively transformed with new and refurbished shops, amenities, and extra facilities for local people and passengers. The sale will bring a major cash boost to help fund key projects across England and Wales as part of the Railway Upgrade Plan.” 

Network Rail is currently delivering almost a quarter of all infrastructure investment in the UK, spending £130m every single week. The funds raised from the sales of the commercial property business will contribute toward investment in projects such as the Thameslink Programme, Crossrail, the Waterloo and South West Upgrade and the Great North Rail Project – which includes the Ordsall Chord, Liverpool Lime Street station upgrade, the Calder Valley lines upgrade and the Manchester to Blackpool upgrade.