Estates Gazette

20/2/2010

Extra time A victory for Everton and Liverpool remains elusive as both clubs see dreams of new stadiums stuck on the bench. By David Quinn

Even by the usually slow standards off complex regeneration projects, the development of new stadiums by Liverpool and Everton football clubs has been remarkably sluggish. And there are few concrete signs that the long wait is coming to an end.

Planning inquiry

Project Kirkby, a £400m retail-led scheme that was to be anchored by Everton and Tesco, was killed off by a government planning inquiry last November, while Liverpool’s financial woes have led to delays to its new stadium and the proposed Anfield Plaza regeneration project.

Football fans and the wider world of property have been left wondering what the future holds for the stadiums and for the regeneration efforts that are bound up with the creation of these new sporting arenas.

Everton adviser Savills argued in a report in October 2008 that Kirkby was the only sensible relocation option for the club, while planning consultant DPP, on behalf of Tesco, ruled out 35 sites around Liverpool and Sefton in November 2007.

Yet Warren Bradley, leader of Liverpool council, says this is no reason to think Everton cannot be accommodated within the city. “You need to have the tenacity on both sides to deliver it, to cut through the bureaucracy and the planning issues, and I think we have that now,” he says.

Bradley orchestrated a meeting between Everton and the council on 11 January and more are scheduled. The details of the discussions are unknown but it is believed that sites in Speke, Switch Island, Edge Lane, Central Docks and Gillmoss could be back on the agenda.

“We are very keen to keep Everton,” says Bradley, who is a season-ticket holder at the club. “When you have a large, successful business with a rich heritage, like Everton, the last thing you want is to see them move out.”

The option of to share a ground is off the agenda for now, although Bradley will not rule it out definitively. “There needs to be common sense. If both clubs struggle to deliver, there should be joint discussions for the good of the city,” he says.

Everton’s decision not to appeal against the Kirkby decision or look at alternative sites in the area is a problem for Knowsley council, which had pinned its hopes on an injection of sporting capital from the Toffees.

Strategy document

Stuart Vendy, partner at Gerald Eve, points out that Knowsley’s recently updated core strategy document “heavily references” the Everton stadium, leaving it with a “big policy void in Kirkby town centre”.

He adds: “The secretary of state has left the door open for a revised proposal, but it looks like Tesco will have to go it alone. The decision not only leaves Kirkby desperately in need of a coherent regeneration strategy but also undermines investment in sites much further afield.”

Knowsley council leader Ron Round is none the less putting on a brave face, pointing out that the regeneration of Kirkby will carry on regardless. “We have had a series of meetings with a variety of partners, including Tesco, government representatives and agencies, and have been encouraged by the support and enthusiasm to develop new proposals,” he says.

Back in Liverpool, positive noises are emanating from Bradley’s Dale Street offices about the chances of early progress on Liverpool’s stadium plans, following discussions with club chief executive Christian Purslow. A start this summer is now considered possible – although fans of the Reds will believe that when they see it.

“There have been lots of false dawns, but we can only take the advice of the chief executive of the football club,” says Bradley.

The key issue is funding. Although assurances have been given that money will soon be available for work to begin on the £400m stadium, Liverpool’s debts total £245m and efforts to find Middle Eastern investors willing to stump up £100m to gain a 25% share of the club have stalled.

A joint venture agreement between the club and the council will be signed once funding is in place. Bradley admits that the club has yet to “clarify the situation” with regard to funding so, for now, the wait continues.

Rice evokes Spirit of Shankly

The Spirit of Shankly supporters’ group shot to prominence in January this year when it successfully campaigned for the resignation of Liverpool FC board member Tom Hicks Jr, after he sent an abusive email to a supporter.

The group’s chairman, Paul Rice, is well known on the property circuit as chief executive of the Liverpool Commercial District Partnership. He is optimistic that Liverpool’s stadium will move forward by the summer – although he retains no faith in the broader direction of the club under owners Tom Hicks Sr and George Gillett.

“I’m inclined to believe [Liverpool chief executive] Christian Purslow and the recent statement that money will be made available for the stadium,” he says.

Spirit of Shankly is named after legendary Reds manager Bill Shankly, and was formed by a gathering of supporters in January 2007. Rice was elected chairman on the suggestion of supporters’ activist Peter Hooton who thought that his professional skills might be useful.

One of Spirit of Shankly’s aims is to work with relevant agencies to ensure that the regeneration of the Anfield area goes ahead.

“The development of the scheme is as crucial to the Anfield area as it is to the football club’s future – the two are inextricably linked,” says Rice. “As a Liverpool fan and as someone working in property in the city, it’s crucial something happens.”

However, the group’s main long-term aim is to take a proportion of the ownership of the club into the hands of supporters.

Rice says: “We’ve said we’ll hold to account whoever the custodians of the club are. We’re not interested in a token seat on the board with no control. If we can get 10% of the club into fan ownership, it can’t be sold above our heads.”

Estates Gazette

21/02/2009

Take-up declines: Hopes that the private sector would take office space on the back of Capital of Culture status have not materialised, and agents are once again looking to public-sector requirements. David Quinn reports

Say it quietly, but 2009 is feeling a bit like 1999 in Liverpool. Take-up is sluggish, rents are not high enough to make speculative development worthwhile, and the public sector once again represents the best hope for striking a decent-sized deal.

The excitement felt among many visitors to the city during the Capital of Culture festivities last year was not shared by office occupiers, as take-up slumped to its lowest level since the late 1990s.

Official figures from Merseyside Property Forum have not yet been confirmed, but are likely to come in at around 260,000 sq ft. This represents a 40% decrease on the five-year average, and a similar annual fall. The reason for the collapse is obvious, according to just about everyone.

As Mark Worthington, a director at CB Richard Ellis, points out: “There was a complete absence of significant public-sector activity, otherwise the figures would have been very different.”

The key public-sector deal that Liverpool was waiting for never materialised during 2008. Public transport operator Merseytravel, which was widely expected to sign for around 120,000 sq ft at Neptune Developments’ and Countryside Properties’ Mann Island, completed the deal only in January.

“Usually, there is one big deal that boosts the figures, and in 2008 it was supposed to be Merseytravel,” says Stuart Keppie, director at Keppie Massie.

“If that deal had dropped last year, the figures wouldn’t be nearly so bad,” adds Worthington.

The deal’s completion provides a solid launch pad for this year’s take‑up. In addition, the UK Border Agency, part of the Home Office, has intensified its search for up to 230,000 sq ft. Downing Development’s The Capital is thought to be the favoured option, although the developer’s senior agency surveyor Robin Ellis would not comment.

Simon Williams, director at DTZ, which is advising the UK Border Agency, also declines to comment on the progress of the search, and on the likely timing of any deal. The local rumour mill is split, with some agents suggesting the letting could happen this year and others pointing towards 2010, or even 2011.

Pace of development

A third potential public-sector deal comes from HM Courts Service, which has narrowed its options to two sites for a Magistrates’ Court. The first is believed to be Kajima’s site at Moorfields, while the other is Terrace Hill’s site close to The Strand, adjacent to Liverpool One.

“The Magistrates’ Court will be a huge stimulus for the city’s economy and a shot in the arm for investor confidence,” says Michelle Steel of Drivers Jonas’ planning and development team. “Large public-sector schemes like this play an important role in maintaining the pace of development that was set in the run up to the 2008 Capital of Culture.”

The fact that Liverpool is pinning its hopes on a public-sector revival to boost take-up could be perceived as a retrograde step in a city that has recently talked up its burgeoning professional and financial sectors.

As one agent jokes, lettings to the likes of Merseytravel are not very “rock ‘n’ roll”.

Deals such as solicitor Hill Dickinson’s 130,000 sq ft letting at St Paul’s Square in 2005 had convinced some that the market’s dependence on such unglamorous government lettings was becoming a thing of the past.

Ian Steele, a director at GVA Grimley, believes that, while some professional occupiers will make a move, a slowdown in requirements from the private sector is inevitable.

“In some cases, professional occupiers will be forced to take space but there aren’t many expanding. I expect a lot of them to take stock and tread water,” he says.

Keppie adds: “We are still looking for the public sector to provide the base. Liverpool hasn’t achieved anywhere near the level of inward investment enquiries that were anticipated in the run up to Capital of Culture.”

The dearth of private-sector requirements could prove problematic for developers of new-build schemes. These include Rumford Investments, owner of 20 Chapel Street, where 121,000 sq ft remains available. Rumford has been keen to push Liverpool’s headline rents forward after achieving a record £22 per sq ft in a 4,000 sq ft letting to architect Broadway Malyan in 2007.

However, few people expect further rent rises in Liverpool. Agents and developers are merely hopeful that existing headline rents in the city can be maintained.

“We are still quoting £16.50 per sq ft at The Capital – we aren’t reducing rents, but all landlords are being more creative about how deals are structured,” says Downing’s Ellis. “People are accepting market conditions and dealing with the challenge.”

Jim Gill, chief executive of economic development body Liverpool Vision, is honest about rental prospects in the city.

“Rents will come under pressure because of the downturn, mainly on new space that hasn’t let,” he says.

Gill has a key role to play in the next tranche of Liverpool city centre office development. Because of yield shift and rising construction costs, agents suggest rental levels that are currently unachievable are now needed to make development financially viable, echoing the position immediately before the last boom.

Back then, £20 per sq ft was the magic number at which a development became profitable. Now, it is closer to £25 per sq ft, creating the feeling that Liverpool is destined to be constantly playing catch-up.

“New-build just doesn’t stack up at the moment, and it’s a brave person who wants to develop speculatively without public support,” says Ian Sherry, director of developer UK Land & Property, owner of Exchange Flags. “The public sector will play a big role in guiding the city through the turbulence.”

As a result of the gap between development cost and final return, developer English Cities Fund has been liaising with Liverpool Vision and the Northwest Regional Development Agency over the terms of a European Objective One follow‑on grant. This would enable the developer to push ahead with the third phase of its St Paul’s Square development on Old Hall Street.

Gill says he is keen to see work start on the scheme but does not want to see it “competing in the market” at “less than the sorts of rental level it should be able to achieve”.

“Each time we have supported a scheme, we have been pushing the rental values in the appraisal,” he explains. In this climate, simply maintaining rents above £20 per sq ft is likely to be the main priority.

Liverpool Vision is disinclined to flood the market with grant-assisted buildings for which tenants may prove to be scarce.

“We don’t want to be overrun,” says Gill. “Right now, it doesn’t make sense to encourage an awful lot more new schemes, especially when we have refurbished space available.”

Getting the balance right between future supply and likely demand in the face of unpredictable property values is undoubtedly taxing. Nonetheless, if ECF’s building goes on site later this year – with completion in 2011 – it will be the only new-build office block in the pipeline.

“Now is great time to start to develop if you have money in the bank,” says Steele.

Unfortunately for Liverpool, few developers do, meaning that, like elsewhere, prelets are likely to become the norm in the short term.

In truth, Liverpool’s position is no worse than that of other cities around the UK, while the increased availability of public funding – and requirements from the public sector – could be the city’s saving grace as the recession takes grip. Agents and developers in the city will be hoping this is the case.

Out-of-town market outpaces city centre

Liverpool’s maturing out-of-town market had a strong 2008, with unconfirmed take-up of around 280,000 sq ft, outpacing that of the city centre for the first time.

“The market out of town has not suffered the same reduction as the central business district, and the figures have held up reasonably well. We have seen some decent deals of more than 10,000 sq ft,” says Alistair Newman, partner at King Sturge.

Building contractor Kier’s decision to take 15,000 sq ft at UK Land & Property’s Estuary Office Quarter in Speke provided an end‑of-year boost for the established south Liverpool market. UKLP managing director Ian Sherry says around 100,000 sq ft of further office space will be developed at the site “when the market stabilises”.

Meanwhile, the freehold sale to One Vision Housing of the 35,000 sq ft Atlantic House in Sefton shows that there is growing interest in the north of the city among occupiers.

The seller was the Mason family - owner of Mason & Partners surveying practice – which developed the building.

Market at a glance

City centre take-up for 2008 is likely to be between 250,000 and 260,000 sq ft. This compares with 463,000 sq ft of take-up in 2007 and a 432,000 sq ft five-year average

City centre rents are £21 per sq ft for grade A stock. Refurbished buildings are £17 per sq ft

Out-of-town rents are £14 per sq ft for new-builds and £11 per sq ft for refurbishments

Availability of new city centre offices is around 188,000 sq ft, comprising 121,000 sq ft at Rumford Investments’ 20 Chapel Street and the remainder at English Cities Fund’s St Paul’s Square

Sources: Merseyside Property Forum GVA Grimley

Estates Gazette

17/11/2007

Ahead of the pack Urban Splash is not going mainstream. On the contrary, the rest of the property industry is catching up. David Quinn reports.

Urban Splash has never been a classic property company. Renowned for unusual conversions andcutting-edge architecture – and setup by a man who made his name selling posters to students in Manchester’s Affleck’s Palace – the company appears outside the norm.

But Urban Splash is colliding with the mainstream. Not because of an abandonment of its principles, but because the rest of the property industry is beginning to catch up.

“I never think of Urban Splash as a maverick company,” says co-founder, chairman and erstwhile poster retailer Tom Bloxham, glugging on a Diet Coke in his minimalist Castlefield office. “The world is conspiring to come towards us. Big commercial developers are looking at what we’re doing. We’re not a maverick at the edge. We’re the direction the property industry is travelling in.”

The point is illustrated by the answer Bloxham gives when asked what characterises Urban Splash as a company. Ten years ago, his reply – “good design and architecture, a mix of uses and tenures, regeneration” – might have sounded a little left field. Today, it doesn’t.

Deputy chief executive Nick Johnson adds that “punk culture” has influenced Urban Splash’s work. “We encourage people to use their own personality to influence the decisions they make,” he says.

The environmental agenda is also a key concern, but Johnson says he has no time for “gling” – meaning “green bling”. He reasons that, if you can see a green feature such as a wind turbine on a building “it isn’t doing anything”, and professes a preference for the “unsexy stuff”, such as combined heat and power systems.

Sizeable premium

The growth of the Urban Splash brand is such that Johnson readily admits the developer can charge a sizeable premium for its product – up to 15% at Chips, its 142-unit residential scheme in New Islington, Manchester, designed by Will Alsop.

It is difficult to imagine any developer other than Urban Splash delivering a scheme called Chips, which is so named because it looks like three chips lying on their side. Bloxham, however, rejects the idea that the company has become overly associated with outlandish developments during its 14-year history.

“You can’t define a typical Urban Splash scheme,” he says. “We get sent opportunities for Victorian-mill conversions, and people say, ‘This would be ideal for Urban Splash’. But there would have to be something really special about it for us to do something like that today.”

Instead, the developer has recently turned its attention to unloved concrete tower blocks, the product of outdated “cities in the sky” slum-clearance programmes of the 1960s.

How can Urban Splash create demand for this type of living accommodation when history seems to show that nobody wants it?

Bloxham believes a re-evaluation of such buildings is necessary.

“The reason these things failed is because of a lack of maintenance and poor management, rather than intrinsic problems with the buildings themselves,” he says.

Bloxham also believes it is “incredibly wasteful to knock down a building”, and would rather use what is there.

This preference for recycling was followed at Chimney Pot Park in Salford where, instead of demolishing the terraced houses on the site, Urban Splash elected to turn them “upside-down” by creating anopen-plan living space on the first floor, backing on to a raised outdoor space.

Despite its ingenuity, the English Partnerships-backed scheme is arguably Urban Splash’s only brush with bad publicity, after complaints from locals that they could not afford the £99,500 finished product.

“The issue revolved around a statement about homes for £50,000, which was made five years ago and got into the press,” says Johnson. “The market has obviously moved on since then. If we were to sell at that price, it would have required much more public funding.”

Grant funding

Within the property industry, those who do not know much about the company all say one thing: that, as in Salford, Urban Splash has a mastery of the process needed to secure grant funding. Bloxham says that while this could be true of some of its schemes, many others required no contribution from the public purse.

“In Manchester, there’s no public funding needed anymore in the city centre. All our recent schemes in Liverpool are happening without funding, whereas 15 years ago, when no one else was doing anything in the Ropewalks area, it was needed,” he says.

As the mainstream collides with Urban Splash’s way of thinking, some have ventured to suggest the company could make a compelling purchase for one of the giants of the industry. But Bloxham, who owns 70.9% of Urban Splash, shrugs the idea off.

“I love doing what I do – taking blighted, ugly sites and creating objects of beauty,” he says. “If I did sell out, I’d probably put all my money into property, so there wouldn’t be much point.”

For now, Bloxham’s empire looks set to keep on growing. The rest of the property industry may be on Urban Splash’s tail, but he is keen to keep ahead of the pack.

[Box]

Splashing across the Mersey

Urban Splash is undertaking 12 projects in Liverpool from its offices on Fleet Street in the city centre.

Its biggest scheme in the city is the Great George Street development, where 700 homes are planned in what Bill Maynard, head of the firm’s Liverpool office, describes as “five big phases”.

It is a far cry from Urban Splash’s beginnings in the city. Maynard, a former Liverpool council planner, confesses that he “laughed” when Urban Splash founder Tom Bloxham purchased the Palace complex on Slater Street with proposals to turn it into “the Covent Garden of the north”.

But when Bloxham linked up with Urban Splash’s other co-founder, Jonathan Falkingham, to purchase several more buildings in the Concert Square area, Maynard became convinced of the growth potential and came on board.

The company is working up £60m plans for the conversion of the Littlewoods building off Edge Lane into 250 flats, a hotel and commercial space.

It was also recently selected to transform the disused ABC cinema on Lime Street into a hotel and restaurant.

“Lime Street is an interesting part of town,” says Maynard. “The local authority and English Partnerships are keen to see something happen because it’s the gateway intothe city.”

Other schemes in Liverpool include the Matchworks office scheme in Speke and the conversion of St Peter’s Church on Duke Street into the footballers’ wives-favoured Alma de Cuba bar.

[BOX]

New Islington: ‘Poundbury on acid’

Perhaps Urban Splash’s most significant scheme, and the one that has defined its ethos, is New Islington in east Manchester, where the company was selected as lead developer in 2000.

New Islington is designed to be mixed-use, sustainable and architecturally innovative. Once completed, it will include 1,700 homes, retail and leisure facilities, 1m sq ft of public open space and a raft of community facilities, including a school.

The company’s deputy chief executive Nick Johnson describes New Islington as “tradition with a twist”, and emphasises its credentials as a sustainable community.

“The constituent parts are parks, canals, a surgery, a primary school, a row of shops – there’s nothing new in that,” he says.

Perhaps surprisingly, Johnson compares Islington with the Prince Charles-backed and critically panned Poundbury development in Dorset.

“It’s Poundbury on acid,” he says, half-jokingly. “The essence of a sustainable community is the same the world over. We all have human needs that need to be satisfied. But we give it a devilish twist. We add a bit of adventure.”

Despite financial pressures, Grosvenor’s massive £1bn redevelopment of Liverpool city centre is beginning to become visible. David Quinn reports

From a nearby roof top, the last few empty buildings on Paradise Street are dwarfed by the white, dusty presence of one of the largest building sites in Europe.

But Grosvenor’s £1bn redevelopment of central Liverpool’s retail core has recently been making headlines, and not because of its physical scale. Instead, all the talk has been about the financial burden it has created for its developer.

It was revealed last month that Grosvenor is to set aside between £50m and £90m in its annual accounts to support the development, which will eat directly into profits. Meanwhile, in Preston, fears are growing that the size of Liverpool One has reduced the company’s capacity to develop its proposed £450m Tithebarn scheme.

Grosvenor says it will absorb the financial hit in Liverpool itself, leaving the consortium of backers which include Hermes and Middle Eastern clients of Arlington Securities unscathed.

But with the scheme so much at the heart of Liverpool’s rejuvenation, and timed to coincide with the city’s coronation as Capital of Culture in 2008, the announcement has raised eyebrows locally.

In the meantime, however, the 42-acre development is moving forward at speed. The development site is scattered with 15 cranes, and the former bustle of Paradise Street has been replaced by a wide, open pathway populated by JCBs.

The core of what will be an Odeon cinema is taking shape. And the structures of John Lewis and Debenhams are in place.

It is certainly a complex project. Rather than slapping a big-box shopping mall on the site, Grosvenor is working with the existing streetscape.

In total, there are 30 new buildings at Liverpool One designed by 20 architects. “The idea from day one has been to create not a shopping mall but a series of buildings with their own character and architecture,” says Rod Holmes, project director at Grosvenor.

While some of the buildings have been completed, details of the majority of the scheme’s retail and leisure elements, and how they fit together, has sometimes been difficult to fathom.

Traditional shopping

Holmes says people in Liverpool have never really had a problem getting to grips with the design and layout, but others have.

“People locally realise that we are rebuilding a chunk of the city centre and that it fits in with the street pattern. It only becomes difficult when we start talking to people in the property industry who are used to dealing with traditional shopping centres,” he says.

The open-air nature of the scheme has had an upside, however. “Certain retailers welcome the fact that this is not ‘another shopping centre’. Some retailers who never take space in traditional shopping centres are interested, because it’s more like a high street,” says Holmes.

In fact, the scheme has five key retail elements (see map, p215) and is broken up into zones, which cater for different tastes and wallets.

John Lewis and Debenhams anchor the two western points of a triangle, which tapers towards the existing Marks & Spencer and the junction of Hanover Street with Church Street. South John Street and Paradise Street form linear retail pitches north to south, while Hanover Street, with more stores, forms the eastern barrier of the project. All this means the retail floorspace of central Liverpool will more than double.

“The different zones are based around real streets in Liverpool and so we have appropriate rents to reflect that,” explains Neil Barber, head of leasing at Grosvenor.

“For example, Hanover Street will be pitched at perhaps a third of the level of South John Street. We realise that different retailers can afford to pay different levels of rent, and we aren’t going to put in a couple of hundred shops at £300 per sq ft zone A. We want a different mix we don’t want a clone town.”

John Lewis, which has had a presence in Liverpool since 1940 and operates from a cramped outlet on Church Street, will be central to Liverpool One’s offer. Ann Humphries, director of retail development, says she is enthusiastic by the trading potential of the new store. “This store will be part of the biggest change to the centre of a city that we have been involved with,” she says.

“We’ve stayed committed to Liverpool. It’s fantastic that we are now getting a new critical mass of retailers as a magnet to bring people back into the city.”

So far, around 60% of the retail element of the scheme is let, with several high street names already confirmed and others rumoured (see box, p215). The next announcement on retailers is programmed for November, and this is likely to include several restaurant names. Holmes anticipates a further flurry of lettings activity next spring, after retailers have evaluated the Christmas 2006 trading figures.

Like the retail areas, the leisure offer will be broken down into zones. The park area will feature what Barber calls “fine dining”, with some of the units appearing to slot into the side of the sloping open parkland, with views of the River Mersey.

More casual dining will also feature here. No deals have yet been signed, but Wagamama, Strada and Gourmet Burger Kitchen are tipped to take space. North West-based ventures are likely to be strongly supported, with Manchester-based Croma and Sam’s Chop House, both favourites among property types, believed to be contenders for units.

Family dining

“These lettings tend to be the stuff you do in the last 12 months so that you can get the right mix and the latest thing, but we are now really beginning to crack into it,” says Barber. “Our advantage is that there aren’t many places in the UK where you can overlook a large park in the centre of a city.”

Other catering offers at the scheme will be family dining, especially close to the cinema, although Barber stresses this will not be a “food court”. The remaining offer will be “dotted around”, with a mix of “coffee stops tailored to particular districts”.

The retail element of the scheme will be completed in the first half of 2008, with some other sections, including 300 flats, being completed at the start of 2009. Holmes says discussions with potential development partners for the flats have been aborted, and Grosvenor will now finance and develop this element on its own.

In less than two years, if all goes to plan, Grosvenor’s complex scheme will push Liverpool firmly into the UK’s top-10 retail destinations. But for now, the clutch of cranes, the diggers and the dust remain.

Liverpool One composition

Paradise Street

Described as a “slick European boulevard”, the 82ft-wide street will be uncovered and have a similar volume and size to Church Street. It will feature a mix of trendy, urban fashion retailers. John Lewis anchors the street at the southern end.

Typical target retailers: Urban Outfitters, USC

Architects: BDP (London), Allies & Morrison, John McAslan, Glenn Howells, Haworth Tompkins

South John Street

The street linking Debenhams and John Lewis will be partly covered by a glass canopy and feature family-oriented multiples. The top level of the street will back on to the open park on the western side.

Typical target retailers: Borders

Architects: Groupe Six, BDP (Liverpool)

Peters Lane

Arguably the most architecturally surprising element of the scheme, Peters Lane will punch through from Church Street via a new entrance created by opening up the existing HMV store. The scheme’s only fully covered section, it will offer aspirational branded fashion and upmarket names.

Typical target retailers: Jigsaw, Space NK

Architects: Dixon Jones, Grieg & Stephenson, Stephenson Bell

Hanover Street

This zone at the eastern edge of the development features a number of larger shops aimed at homeware brands, partly to capitalise on the boom in residential development at nearby Ropewalks. Rents will be lower than those in the prime South John Street pitch. Hanover Street also houses the new BBC studios and landmark “Bling” building.

Typical target retailers: Habitat, Heal’s

Architects: CZWF, Page & Park, Brock Carmichael, Austin:Smith Lord, Owen Ellis

The Park

The hub of the development’s restaurant and catering offer, the 5-acre park will feature a series of terraces overlooking the River Mersey, with 2,000 car-parking spaces concealed beneath. The southern edge is flanked by the Cesar Pelli-designed flats and hotel blocks.

Typical target occupiers: Gourmet Burger Company, Strada, Wagamama

Architects: Cesar Pelli, BDP (Liverpool)

Developers Langtree and David McLean are plotting one of the biggest garden makeovers ever. David Quinn reports on plans to revamp Liverpool’s Garden Festival site as a major mixed-use waterfront park

Passing through the huge iron gates into the site of Liverpool’s 1984 International Garden Festival is like wandering into the movie Planet of the Apes. What were once expertly manicured gardens are now rough and overgrown. Odd architectural features from two decades ago are barely visible beneath overgrown bushes.

Everything – the Chinese pavilion, the Festival Hall, the giant Tarmacked car park – has been left as it was, but is coated in a thick film of abandonment and decay.

If the outstretched, torch-bearing arm of the Statue of Liberty were to poke from the surface of the ornamental pond, in homage to the 1968 film, it wouldn’t come as a surprise.

Despite several proposals to unlock the Garden Festival site for development, and despite part being sold for housing in the 1990s, 88 acres has remained unused since the conclusion of festivities 21 years ago.

But all this is set to change.

Regional waterfront park

In September, developers Langtree and David McLean will submit an application to return civilisation to this ragged wilderness. They plan to develop the site as a “regional waterfront park”, the vast majority of which will be, for the first time since October 1984, open to the public.

The spectacular, yet crumbling, Festival Hall will be demolished to make way for 1,372 homes on a 20-acre plot at the western end of the site. A number of “fringe blocks” overlooking the Mersey, and an element of commercial accommodation, such as local shopping and community facilities, also form part of the plans.

A further 30 acres will be given over to the restoration of the ornamental gardens, parts of which were donated by the Chinese government in the 1980s and which, through subsequent neglect, have become a minor diplomatic embarrassment.

The remainder will be left as open grassland, with a “grand axis” and a route leading from the main entrance of the park to the banks of the Mersey.

After a tour of the dilapidated site, John Downes, managing director of Langtree, and Richard Dean, his counterpart at David McLean Developments, convene at an on-site Portakabin. It overlooks what will one day be the entrance to the new scheme. For the moment, the view consists of a couple of stagnant water features.

Several false starts

The two of them will have to do a lot to convince locals that the jv’s plans will be deliverable. There have, after all, been several false starts, with unviable proposals ranging from a 90-storey skyscraper to a theme park (see box, left). Downes says that, in order to deliver, it’s important to get the balance right.

“We knew about the aspirations of Liverpool city council and we knew we needed to present deliverable proposals,” he explains.

“We must shoulder a lot of responsibility. There’s a fine line between respecting the history of the site and generating enough revenue to make our scheme viable.”

That balance has been achieved by opening up around 70% of the site for public use – the council’s key aim — while developing a money-spinning residential element.

“The development agreement with the council took some working out,” says Downes. “The council was constructive — but wanted assurances that the gardens would be maintained.”

Although Liverpool city council remains the freeholder, Langtree-McLean – now established as a limited company, has a 150-year leasehold on the site.

Earlier this year, the joint venture paid £4.9m for the lease to Planestation, formerly known as Wiggins Group, which itself went into administration this week.

Langtree had been looking at the site for some time, but McLean bought into the project only after Langtree secured its preferred developer position in 2004.

Agreement on joint venture

McLean managing director Dean says: “We looked at the site in the past, as it was something we had an interest in. We had a good relationship with Langtree and, partly through a chance meeting, we discussed and agreed on a joint venture.”

He agrees with Downes that gaining the right to develop the site brings other responsibilities.

“At the moment, the site is ‘defensive’ against the river,” says Dean. “We need to open up the gardens to the wider world in order to secure them for the future.”

But while Planestation’s plans were blighted by a lack of enthusiasm from planners, Downes doesn’t expect problems on that front.

“We’ve worked in full consultation with the council, and it is fully aware of what we are trying to do,” he says.

Dean adds: “Liverpool’s being awarded Capital of Culture status in 2008 is a catalyst to get the scheme delivered. We and the council want the development to be open by then.”

For now, though, the site is being left to nature. The only work happening is a study of the local wildlife. As the scheme progresses, six ecologists will be checking that the local fauna and flora are not disturbed. This means that, for the moment, the gardens can retain their otherworldly appearance.

Potential developers of tall buildings inLiverpool have a right to feel a little confused about the city’s rules on planning. Many in the property industry argue that recent episodes illustrate a lack of consistency over what is and what is not acceptable.

At the start the year, planners turned down Beetham Organisation’s plans for the 40-storey West Tower on Old Hall Street, but this decision was reversed in March when Beetham threatened a legal challenge to the refusal.

Now Maro Developments, which wants to build a 50-storey, Ian Simpson-designed tower at Brunswick Quay on the Liverpool waterfront, appears to be considering a similar approach to lever approval for its own scheme. Planners turned down its initial proposal in January but, in April, the developer resubmitted slightly revised plans featuring fewer flats and more commercial space. Its appeal against the council’s original decision will be heard in July 2006.

Some in the city suggest the council’s unpredictability on planning issues could repel potential developers and investors. “It doesn’t give a good impression of the city. There’s a confused message,” says Steve Moule, managing director of Liverpool developer Albany Assets, which is itself planning a 44-storey tower in central Manchester.

Chris Ives, development director of Maro, agrees. “The message is quite confused,” he says. “We know of arguments used to support the Beetham scheme, as well as Kings Waterfront, which have been rejected when used by us.”

In order to allay the confusion, the council is drawing up a policy document for the development of tall buildings in the city. The consultation process is now complete, and a final report is likely to go before the council’s executive board next month.

According to the draft document, there are three areas where skyscrapers will be most suitable. One is the commercial district of central Liverpool, another the so-called “southern approach” around the junction of Sefton Street and Parliament Street, and the third around Lime Street.

Importantly, however, the council says the policy document will not provide an automatic planning green light for all tower developments proposed in these areas. Each scheme will be examined on its own merits within the city’s wider planning framework.

This means Rumford Investments’ Unity scheme, under construction but arguably outside all three zones, would not necessarily be turned down under the new regime. Nor would Maro’s proposed scheme at Brunswick Quay. Conversely, Chieftain Construction’s proposed 32-storey mixed-use tower at the junction of Skelhorne Street and Bolton Street, adjacent to Lime Street, would not automatically be approved.

Planning application

As Peter Millea, the council’s executive member with responsibility for regeneration, puts it: “Each planning application will be treated separately. Some applications for tall buildings in these areas may not be acceptable and, conversely, others outside these areas may be approved in exceptional circumstances.”

Given these disclaimers, critics might query what the purpose of the policy document actually is. Others, however, believe that it is only right that some attempt at zoning is carried out. “The Liverpool skyline is revered, and rightly so,” says Steve Unwin, head of the Liverpool office of architect AFL, which is designing the 26-storey Alexandra Tower for Millennium Estates and the 20-storey City Lofts tower, both on the waterfront.

He continues: “There’s a lot of regeneration money coming into Liverpool, and it’s a difficult task making sure quality prevails. To zone things is a good philosophy. Sporadic development would not be good for the city.”

Developers, however, are slightly less enthusiastic in their support. Moule warns: “A policy document is a good idea, but it needs involvement from everyone, including developers. There needs to be a consensus.”

Ives adds: “I agree some strategy needs to be proposed, but it’s dangerous if you draw a red line and say tall buildings are only acceptable in certain areas. Each application needs to be judged on its merits.”

An added difficulty for policy makers comes from heritage body UNESCO, which is believed to be considering a ban on tower development in world heritage sites. Much of the waterfront and commercial core of Liverpool attained this status last year.

Unsurprisingly, developers and agents believe development should be allowed to go hand in hand with preserving Liverpool’s heritage. Ian Tomlinson, head of residential at Jones Lang LaSalle’s Manchester office, which is advising several clients on tower development in central Liverpool, says: “The World Heritage Site shouldn’t prohibit development per se. But it does mean that architectural quality needs to be raised above the normal level.”

Ives agrees. “Look at Berlin and Madrid,” he says. “A blend of old and new buildings can be achieved within a world heritage site as long as it’s well done.”

The office of Peel Holdings, one of the UK’s largest landlords and property developers, is perched in what a helpful assistant calls “Peel Dome”, high above the consumerist temple that is the Trafford Centre.

Once inside, there is a conspicuous lack of mahogany panelling, shag pile carpet and the other various trappings associated with mega-landowners of the sort Peel undoubtedly is. Lest we forget, this is a company with assets totalling £2.5bn, whose majority shareholder, John Whittaker, is thought to be worth £929m, which puts him at number seven on this year’s EG Rich List.

On entering one of several boardrooms, one is confronted with a couple of huge maps illustrating Peel’s landholdings. On one side, a plan shows that the company owns virtually everything along the Manchester Ship Canal.

It is undoubtedly a lot of land, and that’s only a small portion of it. The company owns 20,000 acres of land and 5m sq ft of investment property across the UK and in Bermuda, the Bahamas and Spain.

The famous purchase

“It’s been built up with acquisitions over the past 20 years,” explains director Ed Burrows, who has been with the company for the past 17 years.

“We do buy and sell land, but large acreages have been acquired by purchasing other companies.”

The most famous of these purchases was Peel’s acquisition of the Manchester Ship Canal Company in 1987.

But the firm hasn’t just sat on its landholding, having invested over £300m in the Ship Canal and its environs during the past 12 years. Add to that the £350m the firm has thrown at the Trafford Centre and a further £300m invested by the centre’s occupiers themselves, and you have a total of well over £1bn invested in the Ship Canal Corridor, all spurred by Peel.

The company has further plans for the corridor in the shape of Port Salford, a proposed multimodal freight terminal on a 200-acre brownfield site close to Barton Airfield in Irlam. Salford council is considering the proposals.

At the eastern end of the Ship Canal sits Salford Quays, where Peel owns most of the remaining development land. The company’s latest plan for the area is the 15-acre Quays Point. Peel already has planning permission for a 1m sq ft office and residential development on the site, which is opposite the Imperial War Museum North. It plans a “Third Grace” landmark building to complement the Daniel Libeskind-designed Museum, and the Lowry.

“Salford Quays has a parallel with London Docklands,” says Burrows.

“It has a similar relationship to Manchester city centre as Docklands has to the City of London: similar facilities, and Metrolink tying it to the city.”

The other major site at Salford Quays is known as Pomona and is a 26-acre plot at the eastern end of the quays. Peel has submitted an application to develop 500 flats. It will not build these itself.

As with Quays Point, once Peel has obtained planning permission, it will sell to a residential developer. Crosby Homes, City Lofts and Millennium have recently bought large plots from Peel in this way, and are at various stages of development. At the moment, Peel has no plan to cut out the middle man and go into residential development itself.

“Peel doesn’t build houses,” says Burrows. “That’s a specialist market. Our policy is to maximise planning permission on a site, then sell it on.”

But Peel is a sophisticated landowner, having realised the potential of a long-term approach. It has donated £12m, plus a significant landholding, to the Imperial War Museum North, as well as in excess of £5m of land to the Metrolink tram system. These may seem generous acts, but the fact that these two projects have led to a huge increase in visitors to the area, as well as improved national and international perceptions of Salford Quays, has caused a huge growth in land values.

The long-term view

Perhaps Peel’s commitment to the long haul was behind Whittaker’s decision to take the company private in August. Although Burrows prefers not to speculate on the reasons, he does say: “The company has always had a long-term view.”

Whittaker is said to be a very “hands on” chairman who takes a strong interest in the day-to-day affairs of the business. He has four children, three of whom work for the firm. The other is expected to join after graduating from university. The eldest is Mark, who has been with Peel for 10 years. He is in charge of the Peel Investments wing of the business, which holds and trades a mixed portfolio of property across the country, and has an annual rental income of £40m.

He is responsible for letting Venus, the 91,500 sq ft office building the firm has developed in an area it is calling Trafford Quays, opposite the Trafford Centre. Half of the building was let earlier this year to medical supplies company SSL International.

“We see Trafford Quays as a new business location. We’re trying to create a mixture of uses between offices and leisure, and that’s why we developed Venus,” says Whittaker.

“The strength of the location lies in the fact that we have secured a 45,000 sq ft letting within three months of practical completion. We want to continue to strengthen Trafford Quays in response to market demand.”

At present, much of the land around Trafford Quays does not have the relevant planning permission to permit Peel to embark on this project, but the firm is hopeful it won’t be long in coming.

Peel also recently launched Peel Business Parks. Around 2,000 acres of land have been siphoned off into this venture, much of it located near the four airports the company owns in Liverpool, Teesside, Sheffield and at the former RAF Finningley, also known as Robin Hood Doncaster Sheffield Airport. However, there are 20 different sites in total, in areas as diverse as Wakefield, Ellesmere Port and the M3 corridor.

Matthew Fitton, property development manager, who is tasked with developing the business parks, says: “It’s a case of pulling everything together under one brand. We’re currently working to label everything up over the next 18 months.”

Fitton says Salford Quays has been excluded from the Peel Business Parks exercise, although Port Salford, if given the go-ahead, will fall under the new umbrella.

[BOX]
The Peel Empire

Land and property Includes Peel Investments and Peel Business Parks. Schemes include Salford Forest Park, a £100m scheme on the drawing board, which could see horse racing return to Manchester. Also includes land at Salford Quays, the 1.4m sq ft Trafford Centre, Trafford Quays, Port Salford and Gloucester Quays

Peel Ports Includes the Manchester Ship Canal, Clydeport (Scotland’s only Atlantic-facing port), and the Glasgow Harbour Development

Peel Airports Liverpool John Lennon airport, Teeside International airport, Sheffield City airport and Robin Hood Doncaster International airport at the former RAF Finningley airbase

Total holdings 5m sq ft of investment property and 20,000 acres of land worth £2.5bn

With some seriously big-name retailers looking at space-strapped Liverpool, whoever wins the right to develop at Chavasse Park should cash in. But first, planners must sort out the mess. David Quinn reports

Liverpool’s agents are fed up. The cause of their woe is planning battles that are delaying retail development in the city.

The city council’s ongoing tussle with Bill Davies’ Walton Group over its proposed 1.1m sq ft (102,200m2) shopping mall at Chavasse Park is increasingly seen as an embarrassing mess that is sapping the vitality of the city’s retail core.

Luckily for agents, the end of the affair may be in sight. Last month, planning inspector Richard Mordey appeared to give his blessing to Grosvenor and Henderson Global Investments’ rival city-centre retail development plan for Bluecoat Triangle, in roughly the same location.

Mordey’s report, in relation to the alteration of Liverpool’s unitary development plan, said that bringing “vacant sites and buildings back into use is infinitely preferable to a self-contained, mall-based design either in the Paradise Street/Bluecoat Triangle or at Chavasse Park”.

This statement has been interpreted by the council as an independent vote of confidence in the £800m Grosvenor-Henderson scheme, on which work could begin before the end of the year. A spokesman for Grosvenor describes the report as “very good news”.

Doubt cast on the park

The report is likely to cast further doubt on the viability of Walton Group’s proposals for Chavasse Park, although a separate judgment on this issue is not expected until later this year (see panel).

Walton Group remains bullish and is committed to going ahead with the development, despite Mordey’s comments. A spokesman for the developer says: “There’s everything to play for.”

He adds: “This has been going on for several years. The council has described each hurdle that has been thrown at us as ‘insurmountable’, but we have proved otherwise.

“This is only the report on the UDP. A separate judgment on our plans is still to come and we’re still 100% committed to the scheme.”

Whatever the eventual outcome, the ongoing delay to improvements to Liverpool’s retail core is creating intense frustration among agents. With several major retailers seeking to obtain a presence in the city centre, the slow progress in furthering retail development – caused by what agents see as pointless political wrangling – is causing headaches.

“People working in retail would like to see something happen – there’s enormous pent-up demand – but retailers don’t want to commit while we are in a state of flux,” says Peter Burke of Mason Owen.

Selfridges and Harvey Nichols are both rumoured to be considering a move into Liverpool, as are House of Fraser, Allders and Debenhams. Meanwhile, John Lewis’s George Henry Lee operation is believed to want to expand from its somewhat cramped accommodation.

“The way the city centre is laid out at the moment, there are no big box facilities, so there are some pretty big requirements that can’t be satisfied,” says Daniel Oliver of Hitchcock Wright & Partners.

Jonathan Owen of Irving Rice adds: “With the lack of certain occupiers we have, you have to wonder whether customers have no choice but to spend their money elsewhere.”

Because of these problems in Liverpool’s retail market, one contingent of the city’s agents believes that speed is of the essence. They do not care which of the two rival schemes gets the go-ahead – so long as one of them does soon. Rumours that the entire local property industry is in cahoots with the council and Grosvenor-Henderson are exaggerated.

Says Oliver: “Either of these schemes will be fantastic, and retailers won’t care who the developer is.”

Nonetheless, some local agents are nervous about what could happen if Walton Group gets control of Chavasse Park.

These agents welcome Mordey’s report and its implied backing for Grosvenor-Henderson’s scheme. This is because they privately believe that the fate of another Liverpool site owned by Walton Group provides an indication of what might happen should Chavasse Park fall into its hands.

In 1996, Walton Group launched plans for a shopping centre at the former post office site on Whitechapel. The following year, Walton’s Davies told EG that the site would become a 300,000 sq ft (27,870m2) retail and leisure scheme anchored by two department stores and renamed Stanley Street Store. He claimed that a multiplex cinema operator had been signed up.

Today, the site – now known as Met Quarter – remains an eyesore, steel framework having been erected but with no visible construction work having taken place for some time.

This track record is the main reason why sections of the property fraternity are worried about Walton Group’s Chavasse Park proposals, despite the company’s recruitment in 2000 of Capital Shopping Centres as development consultant. Concerned agents feel that a development on this site could be easily let and are puzzled by the slow progress.

A Walton Group spokesman says that development of the Met Quarter became possible only in the past two years, after the company secured the frontage onto Whitechapel. He adds that the Met Quarter is being redesigned to make it more attractive to occupiers and that interest has been expressed in more than 25% of the scheme.

Agents remain unconvinced. One asks: “If Davies gets hold of Chavasse Park, will he actually develop it?”

Nigel Bennett, who runs Liverpool-based retail consulting firm Bennett, puts it more diplomatically. He says: “Walton Group has the intention, ability and resources to develop Chavasse Park, subject to statutory consents.

“However, at some point in the short- to medium-term, there may possibly be some commercial advantage to Walton Group in reaching a mutually acceptable agreement with either Liverpool city council or Grosvenor-Henderson to mothball its plans for the development.”

Walton Group rejects this suggestion, saying emphatically that it will develop. “Delivery is not a problem,” says the company spokesman. “We have Capital Shopping Centres on board and they make things happen.”

Davies does battle

Many in Liverpool do not begrudge Davies his right to persist in battling with the council over Chavasse Park. After all, he secured the option to develop there fair and square. “He’s a good businessman,” says one agent. “If you had the council by the balls, you’d do the same.”

Nevertheless, most agents in the city are in favour of the rival Grosvenor-Henderson scheme. James Kersh of Kersh Commercial, for example, says: “Grosvenor-Henderson have an international track record. They would move in with confidence and would attract strong tenants.”

Mason Owen’s Burke agrees. “I prefer Grosvenor-Henderson’s scheme because it is more concentrated around the existing retail pitch. It bolts on, rather than creating something elsewhere,” he says.

Retailers also favour Grosvenor-Henderson. David Wade-Smith, whose family owns the Wade Smith clothing empire, says: “Grosvenor’s track record at building things is considerably better than Walton Group’s.”

As well as the announcement by the planning inspector last month, other factors appear to be stacking up against Walton Group.

The developer could be cast against the rocks of the planning system – particularly PPG 6 – or may be caught out by one of the rules of the option agreement originally agreed with the council. One of these specifies that Walton Group must have tenant support for two-thirds of the retail element by this summer, and no retailers have yet been confirmed.

Even so, Walton Group has the option of judicial review should the next round of the planning battle go against it – which means that the city’s retail future is still, for the moment, unclear.

Chavasse Park
Walton Group still in control

In 1996, Walton Group purchased an option to develop on the 6-acre (2.4ha) Chavasse Park site.

Three years later, a change of council administration from Labour to Liberal Democrat resulted in the council attempting to buy Walton out of its option. It succeeded in the High Court but then suffered defeat on appeal.

In 2000, urban regeneration company Liverpool Vision backed Grosvenor-Henderson’s rival Bluecoat Triangle retail scheme on a site surrounding Chavasse Park. Undeterred, Walton Group submitted a planning application for a 1.1m sq ft (102,200m2) glass-covered mall, designed by 94-year-old US architect Philip Johnson.

The council went back to the High Court to ask it to interpret the development option in its favour. Again, it failed.

Meanwhile, Capital Shopping Centres – now owned by Liberty – became Walton Group’s development consultant on Chavasse Park.

In July 2001, the High Court told Liverpool city council that it could not stop Walton Group purchasing the Chavasse Park site for £15m and, by September, the council was forced to accept a £750,000 deposit from the developer.

The planning inquiry into Walton Group’s scheme – and into Liverpool city council’s proposals to change the city’s unitary development plan to accommodate Grosvenor-Henderson – began in November. In May this year, judgment on the UDP appeared to back Grosvenor-Henderson, throwing doubt on the future of Walton Group’s proposals.