24 September 2007 – Financial Times
Not so long ago the area surrounding Paddington station in west London was a derelict post-industrial landscape, where few would linger after nightfall.
But a 1.8m sq ft development scheme of offices and flats is set to seal the area’s transformation into the Canary Wharf of west London.
A consortium backed by the Reuben brothers, two London-based billionaires, is beginning work shortly on six buildings around Paddington Basin, the end of the Grand Union Canal which winds its way down from Birmingham.
They will include a 43-storey residential tower – the tallest in the West End, where traditionally it has been hard to obtain planning permission for skyscrapers. Called Merchant Square it will have 559 flats and more than 600,000 sq ft of office space.
The project is part of an estimated 8m sq ft of development round the railway station, much of which has already been built. An estimated 30,000 people will eventually work there.
Some already see the area as a counterfoil to Canary Wharf, which helped to transform the fortunes of London’s docklands when it was built at the Isle of Dogs in the 1980s and 1990s.
The consortium behind the scheme, called European Land, includes Pearcroft, a private property company, as well as the Reubens, who made their fortune in the Russian aluminium industry in the 1990s.
The brothers, who have invested heavily in UK property, became involved in Paddington after they took part in the takeover of Chelsfield, the developer which had been Pearcroft’s partner on the project.
European Land itself already has a track record in the Paddington area. Two years ago it built 230 apartments at the neighbouring “Paddington Walk” and two office blocks totalling 475,000 sq ft.
These buildings, The Waterside and The Point, were let as headquarters for Marks and Spencer and Orange in moves that would have seemed outlandish a few years earlier.
“Orange and Marks and Spencer coming here were pivotal; it is no longer seen as a pioneering move to come to the area since,” says Howard Dawber, managing director of European Land.
“There have been a couple of false dawns for this part of the basin but the momentum has now been achieved.”
Merchant Square, which was drawn up by US architecture firms, won planning permission in phases earlier this year.
The progress in the Paddington area is in contrast to other “regeneration” areas of London, such as King’s Cross and Elephant & Castle, where progress has been slow. A lack of space in more established parts of the West End, where vacancies are at record lows, has spurred developers to take a bet on Paddington.
Development Securities, a rival property group, is building 250,000 sq ft of office space on top of the CrossRail terminal at the station.
The group has already created nearly 350,000 of new space in two buildings let to tenants including Prudential, Kingfisher and Chiltern.
Another, Derwent London, is set to complete its Telstar House development later this year and has persuaded Rio Tinto to take the whole building as its headquarters. Derwent is hoping to go ahead with another 360,000 sq ft office block on North Wharf Road.