09 February 2007 – Property Week
The development of Paddington basin is a stop-start saga that is about to start again. A year-long hiatus is due to end on 1 March when Westminster City Council’s planning committee is expected to deliver its verdict on a proposed development of 196 flats on the bank of the Grand Union Canal.
Then on 3 May, the committee will consider a 355,00 sq ft (32,980 sq m) office scheme with a health club and shops. Four other buildings await their turn for planning consent in the final instalment of the story of how a former tow path was transformed into a place where people live and work. If the plans are approved, work should begin on site in June or July.
The developer has changed everything: its own composition, its name, and the name and design of a scheme that already been granted consent.
Yesterday marked the first anniversary of Paddington Development Corportation’s planning application for 1.8m sq ft (167, 224 sq m) of flats and office across six buildings. This replaced the Lord Rogers-designed Grand Union Building, a 650,000 sq ft (60,386 sq m) scheme comprising offices and 500 flats that gained consent in 2003.
Now, the newly renamed European Land & Property – a name change that was necessary because the company wants to bid on the redevelopment of Chelsea Barracks – awaits the verdict on the recently rebranded Merchant Square.
However, the company’s development director, Nick Searl, points out that the development team has changed little since it came together in 1995. The Reuben brothers bought out Elliott Bernerd’s Chelsfield in 2004, but the Jervis family’s Peacroft trust was in from the beginning.
The team has developed headquarters in the basin for Marks & Specner and Orange, and sold both to investors. Last month, the final two penthouses and two duplexes at Paddington Walk were sold.
This phase was completed in 2003, but further development stalled when the basin was earmarked for Paddington Health Campus, the abortive ‘super hospital’. However, by 2005 the value of the land was too high for public sector development.
Searl, who has been with the project since the Chelsfield days, says the developer had a change of heart during the 10 months when the health proposals stymied the Rogers’ development. ‘We decided that we were not going to work on this because there was too great a risk,’ he says.
Searl also gives the insight into the year-long discussions with the council. ‘Essentially, they liked our scheme,’ he says. ‘The kind of things they wanted information on was community facilities. They wanted to see a viewing gallery at the top of the tower.’
The planning committee has not scheduled any discussions for the residential tower – which, at more than 40 storeys high, will be taller than anything Rogers envisaged and in line with London mayor Ken Livingstone’s guidelines.
The lower 10 floors will be for social housing and will be handed over to a housing association. All three residential buildings will accommodate social hosuing totalling 154 flats. This differs from other large proposed schemes in central London where developers pay commuted payments or build the social housing off site to avoid a mix of tenure.
‘We didn’t want one individual building, because we don’t believe in ghetto creation,’ says Searl. ‘The social housing will have a seperate enterance, which is the convention, but we are trying to make the design as egalitarian as we can.’
But in a London hungry for offices, those involved in commercial property will be most interested in the progress of the office element.
To get away from the uniformity of the discarded scheme, architect Mossessian & Partners has designed something that looks like three wedges of cheese, even though it is all one building. However, the planners disliked the central wedge because it was faced with red glass and, when they consider it in May, the colour will have to be toned down.
Many will want to focus on the rent Merchant Square can command. Searl points to the £46.50/sq ft (£500.53/sq m) that Derwent Valley achieved on Telstar House in Eastbourne Terrace in a prelet to Rio Tinto Zinc. ‘Our expectation is that we might get slightly more than that because we are by the water, ‘ he says.
But the real competition will come from Development Securities which has been developing Paddington Central since 1998 on old railway goods yards to the west of the basin.
By the end of the year, DevSecs will have completed One Kingdom Street, its 260,000 sw ft (24,155 sq m)) speculative office scheme where no rent is quoted and no tenants have signed up. The letting agent, Savills director Simone Stone, boasts: ‘With every day that goes past, Merchant Square is another day behind us. It hasn’t even got planning yet.’
The next chapter of the sage could be about the race for tenants between Kingdon Street and Merchant Square.