Swiss Re puts Gherkin up for sale

The Erotic Gherkin, one of the most iconic buildings in the UK, is up for sale with an asking price of about £600m.

It is understood that Swiss Re, the insurance group which owns the tower, has appointed agents DTZ and Eurohypo, the German bank, to sell the 40-storey skyscraper.

Potential bidders including Land Securities, British Land, Prudential, the Abu Dhabi royal family, Insight and ING have already made approaches to buy the tower.

Swiss Re is believed to be open to selling either the entire 500,000 sq ft building or a large stake in it.

The building at 30 St Mary’s Axe was designed by Foster & Partners and built in 2004 on the site of the old Baltic Exchange, which was damaged by an IRA bomb in 1992. At 590 feet it is only a little shy of Tower 42, the tallest building in the City of London.

The tower was the first new skyscraper to be built in central London for 25 years and is widely seen as the result of a change in policy by the Corporation of London to compete with the mega-towers of Canary Wharf, several miles to the east.

In 2004 its design won the prestigious RIBA Stirling Prize for the best new building designed by a British architect.

Yet despite its awe-inducing architecture and “green” features it took several years to let – and a couple of floors are still vacant. Some potential occupants complained that the floorplans were not as practical as many other, less striking office blocks.

Swiss Re occupies the first 16 out of 34 office floors. The others are occupied by a number of small, mainly financial companies such as Allianz, the German bank and Cardinal Asset Management, an investment firm. Other tenants include Coutts, the private bank, Hypo Real Estate, a German lender, law firm Kirkland & Ellis and Mayer, Brown, Rowe & Maw, another law firm.

When fully let the building will have annual rent of £27m, suggesting a yield of below 4.5 per cent if it fetches the asking price.

The asking figure would suggest that prices have continued to rise during 2006, despite fears that the investment market for commercial property is in a bubble.

At the start of the year, Tishman Speyer, the US property company, joined up with Schroders to pay £520m for Citypoint, a 36-storey City tower, in January at a yield of 5.8 per cent.

Insight Investment and Tishman International meanwhile paid British Land £527m for One Plantation Place, a yield of 5 per cent.