London’s Nine Elms: who’s getting a piece of the action
25 November 2013 | By Kate Beioley
25 November 2013
27 November 2013
13 January 2014
27 September 2013
14 November 2013
Lawyer exits and entrances have made for a complex cast list of firms benefitting from the redevelopment of the Battersea Power Station area
In the 30 years since its turbines stopped whirring, Battersea power station’s iconic pillars have overlooked an increasingly desolate area. Two years ago it would have been hard to envisage the glistening cityscape about to be planted on the crumbling region. But fast-forward to 2013 and law firms have been rushing to advise companies on the £15bn redevelopment of London’s Nine Elms region.
Soon to house the US embassy, Dutch embassy and acres of glinting apartments and shops the ‘Nine Elms Opportunity Area’ is an area for real estate lawyers to sit up and pay attention to.
It covers a swathe of land in the boroughs of Wandsworth and Lambeth. Catalysed by the Mayor of London’s Vauxhall Nine Elms Battersea Opportunity Area Planning Framework, the space is home to the Covent Garden Flower Market. Soon it will be filled with shiny new developments including a £800m extension to the Northern Line and 16,000 new homes as well as hundreds of shops, cafes and acres of pristine modern parkland.
There has clearly been jostling behind the scenes for roles on the biggest projects, with firms struggling to cling on to mandates as key players leave. The magic circle has been notably absent from the planning and real estate roles, which may come as no surprise to many, but there is no end to the cast list of firms tussling for planning and real estate roles in the regions.
One stand-out winner was Dentons, which clung on hard to a mandate from St Modwen Properties and VINCI – the joint venture behind the redevelopment of Covent Garden Market – despite the exit of planning partner Stephen Webb. The 340,000sq m development mandate was handed to Webb, ahead of his decision to resign for SJ Berwin in August. Webb did not take the client to his new firm but opted to leave the work with Dentons planning partners Stephen Ashworth and senior associate Roy Pinnock, claiming that he did not want to “rock the boat” by taking the client with him.
Property developer St Modwen, which is also working on the Covent Garden redevelopment, also turned to longstanding advisor Wragge & Co, fielding real estate partner Peter Thorne for the real estate role with consultant Tim Steele, partner Lee Nuttall and real estate finance partner Colin Hurt.
Wragges might have won another top role when SJ Berwin planning partner Duncan Field joined the firm in March last year. Field had scooped a role on Royal Mail’s roster for the disposal of its giant South London Mail Centre – soon to be redeveloped as Nine Elms Parkside. The site is one of the Royal Mail’s three sites due for disposal and will be turned into almost 2,000 homes and a six-acre park. Field left after winning planning permission for the Royal Mail but handed the client to SJ Berwin partner Simon Ricketts.
CMS Cameron McKenna took a big advisery role for BT, which is also setting up office in the region, after trumping a host of panel firms to take a role in advising the telecoms giant’s plans for the tallest brick-clad building in Nine Elms.
Real estate partner Edward Benzecry helped to lure the company over by capitalising on an existing relationship with BT, and the firm won a pitch for the work led by planning partner Ashley Damiral. It is thought the firm’s corporate relationship with Royal Mail was equally valuable in winning it a role on that project, one of the largest sites in the scheme.
CMS has won out in several areas, having also been handed a role on on Sainsbury’s redevelopment scheme.
One of the less lucky firms was Bircham Dyson Bell, which lost infrastructure heavyweight Robbie Owen to Pinsent Masons in October, and with him, the Transport for London (TfL) Tube mandate central to the Nine Elms scheme.
The extension of the Northern Line into Battersea was essential for the rest of the None Elms development. News of a £1bn government loan to fund the extension spurred progress for new stations at Battersea Power station and Wandsworth Road. “The guaranteed investment is what really set this thing in motion,” one source close to the project confirms.
Neither Pinsent Masons nor Bircham Dyson Bell have been present on TfL’s panel in recent years but as a Roll A Parliamentary agent, Owen is one of a select list of lawyers able to promote and oppose private bills in parliament marking him out as a tactical hire for Pinsents. His team won two pitches for the Northern Line Extension role and took the scheme with them when they moved in September.
You got the power
Ultimately, it was the sale of Battersea Power Station in 2012 that set off the entire redevelopment. At the end of last year it was bought by a Malaysian consortium made up of a Malaysian property developer, SP Setia, a Malaysian conglomerate, Sime Darby, and Employees Provident Fund (EPF). Legacy Norton Rose fielded 11 London-based partners were instructed as international counsel for the consortium. The team included real estate partners David Sinclair, Dan Wagerfield and Charlotte Bijlani, infrastructure partner Chris Hill and environment specialist Caroline May. Meanwhile Ernst & Young, the administrators and receivers of the site, instructed Linklaters for the sale, led by London-based real estate partner Mark Burgess-Smith.
The mammoth industrial building was formerly owned by Irish property company Real Estate Opportunities (REO) who went into administration in 2011. Its purchase had been backed by Treasury Holdings. In 2010 Herbert Smith Freehills (HSF) planning partner Claire Fielding succeeded in obtaining planning permission for a £5.5bn revamp of the power station – the largest ever planning application in Central London.
But when REO went into administration the plans were put on ice and Fielding moved to Lawrence Graham (LG). When the role came up again just months after her departure, her relationship with the company meant she snared it again at her new firm. The site will soon be home to one of the largest new retail schemes in London. Like every other development in this site, the building’s industrial heritage is set to be re-written as a love letter to gleaming modernity. Included in the site are 250 luxury penthouse flats that will be perched on top of its looming chimneys and its yawning urban space filled with 35,000sq m of shops, 60,000sq m of office space as well as cinemas, a hotel and gym.
The development is symbolic of the current real estate trend – a cross-border transaction involving Asian investment into prime London real estate. Seen by many as a key trigger for Nine Elms, Malaysian investment is becoming an increasingly dominant feature in the UK market.
SJ Berwin planning partner Simon Ricketts says: “What’s really unlocked this large opportunity site has been the redevelopment of Battersea Power Station and the Northern Line Extension project - and the funding for that.”
Mishcon de Reya real estate partner Susan Freeman agrees: “One thing drives another, so you get one overseas investor coming to the area and it drives more.”
Another key foreign investor – providing a rare magic circle instruction – is Dalian Wanda, the Chinese conglomerate behind One Nine Elms. The Freshfields Bruckhaus Deringer team for the acquisition of the £700m mixed-use site on the South Bank was led by real estate partner Emma Kendall in London and corporate partner Alan Wang in Beijing. Tax advice was provided in London by partner Murray Clayson.
The sale to Green Property was finalised earlier this month, marking the first move overseas by Wanda’s luxury hotel brand as well as the first luxury hotel opened by a Chinese firm outside China. The building will be taller than the London Eye, the Gherkin and the BT Tower and is expected to become a feature of the London skyline in 2016 or 2017.
One Nine Elms is the second meaty Wanda deal handed to Freshfields this year – the firm advised the group on its buyout of UK luxury yacht company Sunseeker International in June, marking £1bn of UK investments when added to the Nine Elms purchase.
Some foreign investment has been more unusual however. In a striking vote of confidence in the region, the Dutch and American embassies have both agreed to wade into the area. Both struck deals with property giant Ballymore for spanking new headquarters in Nine Elms.
Mishcon real estate partner Simon Hart says: “What Embassy Gardens gives them is a location that, with the extension to the tube, is going to be very accessible and if other embassies locate there it will become a hub.”
A trio of firms sealed the US embassy’s move to its new Nine Elms home back in 2008 – property firm Maples Teesdale advised the US Government, while Wragges partner Peter Thorne took another key mandate in the area, advising Ballymore. Allied Irish Bank, funding the move, turned to legacy Manches property partner Rajan Shori.
Ground was broken on the project in November, six months after the Dutch announced plans to move to the area.
That was good news for Mishcon, which won over the Netherlands as a new client. The Dutch government had been a client of the firm’s employment team and it was able expand that remit to include property, led by real estate partner Simon Hart with construction partner Simon Hunter, planning consultant Wesley Fongenie and associate Nick Harris.
Both Embassies sit in a swathe of land owned by Ballymore, due to be transformed into a sweeping expanse of offices, shops and park land. The company is to build 2,000 homes and is developing up to 600,000sq ft of office space and a 100 bed hotel on the land.
While the company used long-standing adviser Wragges for real estate advice, the choice of planning lawyers was more contentious. The company has traditionally handed work to Berwin Leighton Paisner (BLP), which did work on attaining outline planning permission for the site but did not work on the detailed application.
According to a source, it “seemed strange” that the firm wasn’t on it, particularly as it had acted for the company earlier in the year on its £105m sale of London’s Old Spitalfields Market.
Instead Hogan Lovells were awarded the work for the detailed planning application. The company has used Hogan Lovells and Shoosmiths for planning work in the past as well as Dentons but, according to Hogan Lovells planning partner Claire Dutch, “We have a good relationship with them and we have bagged a lot of work over the past year.”
Ballymore’s importance to the area, along with UK developer Berkeley Homes, proves the enduring importance of UK property companies. Together the two companies account for at least six separate projects in the area. But winning that work is a scramble, and clinging onto it can be harder still.
Berkeley Homes has a trusted circle of advisors though it runs no formal panel. According to Pinsent Masons partner Ian Gilbey, “there are a number of familiar names who crop up. Hogan Lovells tend to do planning. Eversheds do real estate and Ashurst advise as well.”
The in-house legal function is overseen by general counsel Wendy Pritchard, though the two subsidiary companies St James and St George each have preferred advisers.
Pinsent Masons haa acted for St James for 14 years and is working on the Riverlight, Merano Residences and the Corniche led by head of planning Iain Gilbey. Meanwhile Dentons fielded star associate Roy Pinnock for a wealth of deals in the area including St James’ Hampton House, Vauxhall Sky Gardens, Sainsburys and the Covent Garden Scheme.
London’s development is spreading west along the Thames. This is £10bn development has created a bonanza for a handful of firms.
£10bn total investment in area
16,000 new homes
25,000 new jobs
National Grid begins work on the gasholders
Construction of Spring Mews underway
Battersea Power Station breaks ground
Prince Consort House gains planning approval
Demolition of Eastbury House and Hampton House begins
Battersea Power Station site closes
Public consultation held into Battersea Power Station
US embassy breaks ground
Dalian Wanda completes purchase of Market Towers, which will become One Nine Elms
New Covent Garden Market goes to public consultation
Demolition of Spring Mews completed
First chimney comes down at Battersea Power Station
First residents to move into Riverlight