Monday, 10 February 2014

Henderson counts cost of battle for Smithfield

A once-in-a-decade planning battle has erupted in the City of London that is pitting two small but influential conservation groups against a British developer and one of Canada’s largest pension funds.

Henderson Global Investors’ proposal to redevelop the derelict western side of London’s historic Smithfield Market will be tested in the arena of a public inquiry, starting on Tuesday.

The case will be the most controversial development decision since the battles over tall towers in the City a decade ago.

Henderson’s plan restores Smithfield’s derelict Victorian general market building into shops, caf├ęs and bars but would see the historic market hall’s roof replaced with an office block of between two and six storeys.

Site freeholder the City of London Corporation supports the proposal, as do the local and citywide planning authorities, the Smithfield meat traders’ association and government conservation adviser English Heritage.
Against them are ranged Save Britain’s Heritage and the Victorian Society.

Henderson is a FTSE 250-listed fund manager with £12.7bn of property assets under management – some 18 per cent of its total portfolio. It operates globally and has a roughly 50/50 split between institutional and retail investors.

Backed on this project by Canadian pension fund Alberta Investment Management Corporation, their position is regarded with sympathy and some surprise by fellow developers; many did not believe the scheme would face an inquiry.

But others in the property industry are not so surprised. One senior figure who did not want to be named said the partial loss of the historic structure was unnecessary: “It is difficult to accept that a more sensitive scheme cannot make a positive return.”

Marcus Binney, chairman of Save Britain’s Heritage, says Henderson’s scheme is “needlessly destructive and very inappropriate”.

“This is about whether the City of London becomes only devoted to office blocks and financial services or whether other activities can survive in the heart of our nation’s capital,” he said.

Henderson director of property development Geoff Harris counters: “Property development is about vision and to a degree pragmatism. This is a very sad bit of real estate at the moment, these buildings need to play a part in the regeneration of the area.”

Henderson acquired the site for an undisclosed sum when previous owner Thornfield Properties slid into administration in 2010, two years after losing a planning inquiry for an earlier, much more brutal concept. That plan would have replaced the Victorian market with a hulking office block. The latest plans keep three-quarters of the historic fabric, according to Henderson.

But that is not how many of the general public see it. At one Save meeting an audience member won murmurs of approval by describing the developer as “these horrors, Henderson”. Various media outlets have covered the story in a similar tone.

The company did not expect the case to reach a public inquiry, Mr Harris says. It has already spent £3m on the initial planning application, and then at least £1.6m on the public inquiry process, according to sources familiar with the matter. Thornfield spent similar sums, according to those with knowledge of the case.

Henderson has also spent around £4m on shoring up railway tunnel arches that run underneath the site, which are the responsibility of the City of London Corporation.

Henderson estimates the eventual value of its finished scheme to be £160m.
Many of those helping Save are acting for free, but they still estimate their costs in this case to be “tens of thousands” of pounds.

Ultimately secretary of state Eric Pickles must choose whether to accept or reject the planning inspector’s recommendation. Does Henderson’s proposal generate sufficient economic and social benefit to offset the loss of some parts of the historic building?

Save contends that the buildings should remain intact and be converted into artsy shopping spaces along the lines of Camden and Spitalfields markets.

Henderson – and a report it commissioned from estate agent Knight Frank – say Save’s alternative proposal is too costly to be viable; Save says Henderson should sell the building on to a different developer who would preserve it intact.

If it loses the inquiry, Henderson threatens not to sell, meaning the buildings will remain derelict, with minimal maintenance done to preserve them. “If we lose, it will stay as it is,” says Mr Harris. The massive basement running underneath the site will be used as a car park to bring in some revenue, he adds.

The conservation campaigners call this emotional blackmail.

“It’s not blackmail, it’s sensible economics,” retorts Mr Harris. “We won’t lose out.”

This would be the worst possible outcome, according to Nigel Barker, London planning and conservation director at English Heritage.

“Our question for the planning inspector is, can Save’s proposals deliver a long-term future for the building?” he says. “They have to be absolutely sure that they can be delivered. It’s hearts and minds against hard economics.”

No comments:

Post a Comment