Listing Broadgate – three reasons why it’s a bad ideaPosted: June 6, 2011
At the end of last week, English Heritage recommended that the Broadgate office complex in the City of London should be listed. Whatever happens next, this is bad news – for Broadgate’s owners, for Swiss bank UBS, and for London as a leading financial centre.
It’s lousy timing. The planning committee of the City Corporation has recently given permission for the demolition of Broadgate buildings 4 and 6, to be replaced by an impressive new block, designed by architects Make specifically to house UBS. Demolition was to start soon, just as soon as the last tenants moved out of the existing buildings.
The redevelopment will, at the very least, have to be put on ice for two months until culture secretary Jeremy Hunt declares whether to go with the EH recommendation, or not.
The possibility of this listing should also ring alarm bells for the many international investors who have been investing money into commercial property in London. Never mind the risk of your tenant going bust – what about the risk of your building being set in aspic, unable to be renewed?
So let’s spin forward two months, were Mr Hunt to decide that grade II star listing of the existing Broadgate buildings is a good idea. What would that mean?
1) It will stunt the future development of Broadgate
For a start, the presumption would be that any future changes to the exterior appearance of Broadgate buildings would be restricted and minimal. They would need not only planning permission, but listed building consent too. Which would leave the building’s owners with limited options. They could refurbish the interiors of the existing structure; or try to get permission for a redevelopment, which would probably only be entertained behind a retained facade.
Refurbished office space, however well it is refurbished, always attracts a lower rent than new office space; it is also likely to be more expensive to maintain, as it’s not within a structure built to the latest energy efficiency standards. A redevelopment which retained the existing facade would mean a compromise in terms of ideal floor to ceiling heights, and restrict the opportunity to add floors or widen floorplates. There’s plenty of other brand new office space being built, or with permission to build, around the City, so a listing would be a financial disaster for Broadgate’s owners.
2) Important companies will mark the City of London down as a business location
What of UBS? They would probably walk from Broadgate, where their current lease obligations are coming to an end. They might well find suitable brand new office space elsewhere in the City of London, where they have been a committed occupier for the last 25 years. But, if the frustration of planning your new European HQ – only to have it taken from you – is too much to bear, UBS could be off to another, more business-friendly city elsewhere in Europe, such as Frankfurt or Paris.
There could be a knock-on effect, too, on building values, if foreign investors begin to worry their buildings could be listed as well. And that wouldn’t be good news for British pension funds, who have some of their funds invested in UK commercial real estate.
3) It would mean retaining buildings which aren’t that great, are they?
But back to the buildings – are they worthy of being listed? The treat is usually reserved for buildings of high architectural quality. But according to the City Corporation’s planning chief Peter Rees, the Broadgate buildings 4 and 6 are merely pastiche architectural design, watered down with veneers of stone after architect Peter Foggo’s initial concepts were considered too daring for the conservative Square Mile. “To the great chagrin of Peter Foggo – we said the buildings would never get permission unless they were clad in stone,” he told the City planning committee in April, when they approved the UBS redevelopment.