High-rise boom raises the roof for property specialists
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19 June 2014
The only way is up, and London's skyline is going vertical with a number of landmark high-rise buildings either approved, or waiting for the green light, while still more sit on developers' drawing boards or are in the creative dreams of architects.
The recent rise of the London high-rise has been generating plenty of big-ticket work for the City's top-notch real estate practices, and with increasing numbers of towers on the horizon, figuratively at least for now, that work is showing no signs of slowing down.
"Land is a finite quality, so you've got to build higher to get a greater density in the development," is how one City planning partner puts it.
"The Office of the Deputy Prime Minister [ODPM] is keen to increase density and going vertical is an obvious way of achieving it," says another.
With the Government on side and a London mayor who is supportive, the developers and architects have been taking dreams off the drawing board and attempting to turn them into reality. Not all of them will wind up built, but there is still plenty of work for the lawyers.
From the purchase of the physical site, through the planning processes (which was described as "horrendous" and "awful", among other unprintable adjectives) to the finance and funding, letting, construction and ultimate disposal, the work streams are measured in years.
"Planning and construction really go hand-in-hand when you're talking about tall buildings, as developers have to take down what's there before you can get the new one up," says Linklaters planning partner Ray Jackson.
Berwin Leighton Paisner (BLP) property partner David Battiscombe says: "These are pretty challenging projects and they require a multidisciplinary approach. I can't stress that enough. This is not your plain vanilla conveyancing. You're not going to find a guy who's split a house in Streatham doing these projects."
BLP and Battiscombe have the lead role on perhaps the most iconic development in the pipeline for London, the London Bridge Tower, better known as the 'Shard of Glass'. Battiscombe's team includes fellow partners Ian Lynch (property), John Hughes-D'Aeth (construction), Andrew Little (corporate) and Ian Trehearne (planning).
"The question everyone wants answered with these projects is, 'Will it get built?', and in this case I believe it will. There's a momentum behind it," says Battiscombe.
BLP also has the mandate for Liverpool developer Beetham Organisation's £500m mixed hotel-residential development near Blackfriars Bridge in Southwark.
"There's been no deliberate strategy to target this work, but by its very nature it requires a top firm to do it, like ours - but then, I would say that," says Battiscombe.
BLP's client for the Shard of Glass is Teighmore, a division of the Sellar Property Group. Following securing planning permission, the current work for the group includes advising on the procurement strategies for the construction of the tower and on the construction aspects of the pre-letting of the hotel space to five-star operator Shangri-La.
Shangri-La is set to take 18 floors of the Shard of Glass, a crucial tenant, as the developer has stated that at least 40 per cent of the floor space needs to be pre-let before construction will begin.
Clifford Chance secured instructions from Shangri-La on the back of a strong relationship with the hotel chain in the Asia-Pacific region out of Hong Kong. Clifford Chance global head of real estate Cliff McAuley is leading that work, with construction partner Alan Elias and planning partner Brian Hall.
Clifford Chance's magic circle rival Linklaters has perhaps been the biggest beneficiary of the boom in tower developments, scoring key roles on everything from the first of the new generation, such as 30 St Mary's Axe, or the 'Erotic Gherkin', to the latest proposal with momentum, the £1bn, 307-metre Bishopsgate Tower, which will be better known as 'Helter Skelter', developed by German property investors Deutsche Immobilien Fonds (Difa).
Linklaters also advised Heron on its approved 183-metre tower in Bishopsgate and has now submitted an application to extend the building by four floors on invitation from the London mayor.
Difa has been a big-spending Linklaters client since the mid-1990s, with real estate partner James Knox managing the relationship. Helter Skelter will reap big rewards for the firm, with planning partners Ray Jackson and David Watkins heavily involved at this stage.
Linklaters advised Difa on the £50m acquisition of the Radisson SAS Hotel at Manchester Airport last year and the same hotel chain at Stansted Airport earlier this year.
But unlike the Shard of Glass, Helter Skelter does not yet have its planning permission, with the application to be considered by the Corporation of London in the spring. "We're very confident of getting consent," says Jackson, buoyed by the knowledge that the ODPM is growing tired of planning inquiries over skyscrapers in the Bishopsgate area.
Herbert Smith is another firm that has secured big-ticket work on the back of a skyscraper, with real estate partner Patrick Robinson securing the mandate from Minerva for its approved 217-metre City office tower development at 138 Houndsditch.
"Herbert Smith know what they're doing; that project will do well," commented one partner at a rival firm.
Developer British Land is also in on the act, developing the 225-metre office tower at 122 Leadenhall Street, more commonly known as the 'Cheese Grater'. British Land is historically a major client for SJ Berwin; however, the firm has not secured work on this development from its key client, with Linklaters instead getting the mandate.
"The mindset of working for a developer as opposed to an operator is very, very different," says one source. "SJ Berwin know enough to work for the operators, but I'm not so sure they could handle the serious financial aspects to work for a developer."
SJ Berwin is, however, advising British Land on the 65-metre 201 Bishopsgate. Partner Lewis Myers says: "We have a very strong banking department with experience of lending on developments of all shapes and sizes."
But it has not been all smooth waters for the developers and their lofty ambitions, with English Heritage taking a tough stance on skyscrapers it sees as impeding historic London views. This has been a particular problem for the Bishopsgate area, which English Heritage claims detracts from St Paul's Cathedral. It is an issue that has been a bugbear for the planning lawyers on each development, although the ODPM has moved to rein it in.
"We've all had problems with English Heritage in one way or another on every single tall building development," one planning partner laments.
The Commission for Architecture and the Built Environment (Cabe) is another body that developers have to appease, although traditionally this has been easier than pleasing the folk at English Heritage. Cabe's modus operandi is to promote high standards in the design of buildings and the spaces between them and it has been largely in favour of 'trophy buildings' that are architecturally unique.
Many of these projects will turn out to be pie in the sky, but the London skyline will change. So which of the competing firms can best ride the elevator to the top has still to be determined.