This morning British Land PLC has announced that it has agreed a deal Oxford Properties, the real estate arm of the OMERS Worldwide Group of Companies, to develop the Leadenhall Building in the City of London, on a 50:50 joint venture basis.

The distinctive, tapered design of the 225m high office tower has earned itself the nick-name of “The Cheese Grater”. Detailed planning consent is in place and demolition and preliminary basement works have already been completed. The total development cost is expected to be around £340 million. Now that a deal has been struck, the bidding process to select a contractor will commence in January 2011 with the aim of completing the shell and core of the tower by summer 2014. The 47-storey Leadenhall Street tower project, designed by Rogers Stirk Harbour and Partners was due to go-ahead three years ago with Bovis Lend Lease as builder but construction stalled when the recession took hold. The previous building on the site was only 14 storeys high.

The tower is set to become one of the tallest and most iconic buildings in the City of London (future London skyline pictured). The new building will offer 610,000 sq ft of premium Grade A office space in the heart of the Square Mile and will also include public space, retail and leisure facilities. The four storey landscaped public space at the base of the building, covering nearly half an acre, will be on a scale unprecedented in London.

The scheme offers adaptable floor plates, which range from 21,000 sq ft at the base of the building to 6,000 sq ft at the top of the tower. The main drawback of the design of the building is the relatively small floorspace for a building of its height. However, it is hoped that the slanting wedge-shaped design will have less impact on the protected sight line of St Paul’s Cathedral when viewed from Fleet Street. British Land indicates the project is already generating interest from a broad range of occupiers from across the insurance, financial, professional and corporate business sectors.

Chris Grigg, Chief Executive of British Land, said in a press release issued this morning: “We are delighted to be announcing the development of the Leadenhall Building. With its unique and iconic architecture, it is a building which will provide an unbeatable combination of style, presence, location and office floor space in the heart of the City of London. Our partnership with Oxford Properties, brings together two world-class property companies with proven development and asset management expertise.”

This latest deal reaffirms the renewed interest in major new developments inside the Square Mile. Only last week Land Securities announced that construction on the “Walkie Talkie” tower is set to start immediately. Speculative development has also started on the Pinnacle Tower, also known as the “Helter Skelter”. Peter Rees, head of planning at the City of London Corporation suggests that the London office sector is bouncing back after the recession with help from overseas finance. He said: “This is investors bringing money into London from outside the UK, money that would have been spent in New York or the Middle East.”

British Land was the first large developer to announce that it had stopped work on its tower in 2008. Other projects soon followed with developers citing both a lack of available finance and a sharp fall in demand for new office floor space as the reasons for halting construction. Industry pundits suggest that fewer new buildings will be delivered in the next few years and with several lease breaks due among the City’s larger occupiers there could be an increased demand for new office space.