Legal profiles climb, but City nears limit on tall building development

BLP, Herbies and Linklaters have dominated thus far – so what next? asks Jon Parker

Between the Cheese Grater, the Shard of Glass, the Helter Skelter, the Walkie-Talkie and the Electric Razor, a new generation of skyscrapers is set to change the City skyline forever.

With such a flurry of building activity centring on the City, a number of lawyers’ profiles must be rising hand in hand with these towers. But who are the biggest beneficiaries so far?”Everybody has fed off what we’ve done in terms of the new towers,” claims Linklaters planning chief David Watkins, who argues that his firm, Berwin Leighton Paisner (BLP) and Herbert Smith have the City tall buildings market all but sewn up.

And Watkins certainly seems to have the CV to support his own claim of dominance. In addition to the land purchase, planning, construction and recent sale of the the 180m 30 St Mary Axe, or ‘Erotic Gherkin’, for Swiss Re, Watkins also had key roles on the 242m Heron Tower for Heron Property and the 225m Leadenhall Building, or ‘Cheese Grater’, for British Land.”[Other top firms] might know the City as well as we do, but not in development terms,” says Watkins. “You get a reputation for getting certain types of work in certain areas and we have a reputation for doing large-scale buildings in central London, particularly in the City, and this has had a domino effect.”

Watkins argues that it is his expertise as a planning, as opposed to real estate, lawyer that has been key to establishing Linklaters’ reputation as the go-to firm for tall buildings work. He says the same is true of his closest rivals, partner Ian Trehearne at BLP, the firm behind projects including the London Bridge Tower and the Shard of Glass for Teighmore, and partner Patrick Robinson at Herbert Smith, the firm behind the Minerva Tower.

“If you look at a skyscraper from the acquisition side, it’s just another big building – planning is the differentiator,” Watkins adds.

The reason for this is simple: aesthetic sensitivity. Londoners are proud of their city’s historic skyline and developers face significant challenges from architectural heritage bodies and planning authorities when putting up any megalith the public might not be happy with. As one insider puts it: “If English Heritage objects to your estate, they can call it in for a major public enquiry where you have to justify the project to the Secretary of State – and that sort of work isn’t exactly pedestrian.”

The impetus for the current batch of tall buildings work began in 2000 with the election of Ken Livingstone as London Mayor. On assuming office he gave the green light to tall building developments in the City after decades in which towers had been capped to ensure clear views of London landmarks.

The Mayor’s stance was met with eagerness by the City of London Authority, which was concerned that it was losing major corporate tenants to Canary Wharf and other Docklands giants that were covered by less restrictive planning regulations.

The authority’s biggest challenger has been English Heritage. In two crucial test cases, the planning applications for the Shard of Glass and the Heron Tower were both ‘called in’ for review by the Office of the Deputy Prime Minister (ODPM) after objections by English Heritage. In both cases the developers won.

This success has not been solely down to law firms, however. London’s aptly-named Landmark Chambers was closely involved with both planning reviews. Christopher Katkowski QC represented the developers in both reviews and claims they were “test cases that represent major victories for the development industry”.

On the Shard of Glass application the developers were also represented by Landmark tenant Russell Harris QC, with the London Borough of Southwark, which supported the application, represented by Timothy Mould QC, also of Landmark. On the Heron Tower review Katkowski was joined by Landmark tenant Bill Hicks, who represented the City of London Authority.

But Landmark’s presence has not been restricted to winning sides. In the Shard review, English Heritage was represented by Landmark tennant Neil King QC, while charity Historic Royal Palaces, which opposed the building on the grounds that it threatens the view from Buckingham Palace, was represented by Landmark’s Christopher Whybrow QC.

On the Heron review, Katkowski was opposed by English Heritage’s representation Richard Phillips QC and Robert McCracken QC, both of London’s Francis Taylor Building.

But the war is not over yet. English Heritage and McCracken have teamed up with Landmark barrister Alice Robinson, acting on behalf of architectural campaign Save Britain, for a review of Land Securties’ and Nabarro‘s 160m Walkie-Talkie building, represented by Landmark’s Russell Harris QC, which is due to conclude in the autumn.

The campaign received a significant fillip in June 2006 when the World Heritage Committee strongly criticised the Government for failing to protect views of the Tower of London and other World Heritage Sites (WHS) from encroachment by tall buildings.

The committee said it “notes with great concern” that proposed new developments “appear not to respect the significance of these world heritage properties, their settings and related vistas”. It threatened to add the Tower of London to its list of WHSs in danger, and demanded that the Government report back on how it will protect the Tower.

Surely not by coincidence, Secretary of State for Communities and Local Government Ruth Kelly – the politician now in charge of planning applications after that responsibility was transferred from the ODPM – called in the application in November; the same month a delegation from the World Heritage Committee visited the UK to look at planning proposals that might affect various sites.

Katkowski says this could be the start of a new trend, reversing past enthusiasm for tall buildings. “So far the position is that more tall buildings were allowed when the ODPM was in charge of overseeing the applications than have been allowed under Ruth Kelly,” he notes.

However, BLP’s Trehearne argues that the City skyline might not change as rapidly, due to a quite different set of reasons. “Skyscrapers are simply very expensive to build and developers need a good rate of return to make it worthwhile,” he says.

The Minerva Tower, one of Robinson’s key tall building conquests, is one such example, having been scrapped by developer Minerva Properties despite getting permission from authorities.

This might not be as bad as all that for law firms. Tall buildings might catch the imagination of the public, but Ashurst partner Gary Watson, who led the financing of the Shard, argues, that for law firms “it’s not so much about the towers, it’s about following the clients”.

“People want long-running projects – towers aren’t the be-all and end-all,” he explains. “If you look at the expansion of Canary Wharf and what’s going on in Shoreditch, for instance, it’s not tower building, but it’s major redevelopment work that any firm would love to have on its books.”

Yet, while tall buildings may not necessarily be more profitable than any other big development projects, Clifford Chance commercial real estate partner Mark Payne argues that they have an unquantifiable value on top of what gets set down on the balance sheet.

“Skyscrapers aren’t necessarily more profitable than any other real estate development, but they do catch people’s imagination and are particularly prestigious and that makes a difference,” he concludes. “Gulf clients in particular just really love landmarks.”

Herbies and Linklaters have dominated thus far – so what next? asks Jon Parker