LONDON — Trying to renovate a Victorian market and tack on some offices hip enough for Google in the oldest part of this ancient city is not a task for the weak of heart. Just ask Geoff Harris.
As head of property development for Henderson Global Investors, he is the face of a 160 million pound, or $266 million, proposal to restore a handful of buildings in the historic Smithfield Market in the heart of the City London, the historical financial center, and designed by Sir Horace Jones, the architect responsible for the Tower Bridge here.
According to Mr. Harris, Henderson’s project is noble and expensive, restoring historical grandeur to the Victorian market buildings while integrating new space for shops, restaurants and desperately needed modern offices.
His opponents beg to differ. “This would be the worst mutilation of a major Victorian building in 30 years,” said Marcus Binney, founder of SaveBritain’s Heritage, a conservation group that has two full-time employees and significant political sway.
The debate over the future of Smithfield, which is now part of a prominent public hearing, pits big, global money — Henderson is a £70.8 billion global investment fund with 1,000 employees — against local conservationists who enjoy the support of some prominent actors, playwrights and politicians. But the vitriol arising from the Smithfield project underscores broader issues, including the soaring cost of London real estate and the inequality that has fueled and the question of how to upgrade the creaking infrastructure of culture-rich cities like London.
“If the only people who can get a lease in this new scheme are ‘institutionally acceptable,’ i.e. no mom-and-pop shops, that will reduce the diversity and interest and opportunity that the city can provide,” said Eric Reynolds, founder of Urban Space Management, who is working with the conservation groups that oppose the project. They have put forth plans to refurbish the Victorian market along the lines of two other popular London markets, Covent Garden and Borough Market Hall.
Smithfield’s market buildings are in the City of London, where ancient ruins and cobblestone streets abut modern high-rise steel showcases. Not far from Smithfield, a Starbucks is tucked neatly into a centuries-old church, and the Royal Exchange, a popular cafe and arcade, is frequently mistaken for the Bank of England, which is across the street in a less-handsome building.
Considered one of Europe’s great 19th-century covered market halls, Smithfield sits on top of what will be one of London’s busiest transportation hubs, connecting two busy train lines after construction is completed in 2018. It will be 40 minutes from five airports, and neighbors in the area include Goldman Sachs, Amazon.com and Google. Young technology workers from nearby Shoreditch are gravitating to the area, priced out by their richer counterparts.
Commercial real estate development is on the rise in London, with cranes visible across the skyline. The City of London Corporation, a civic body that oversees the financial district, says the vacancy rate is 8.5 percent, lower than the 10-year average of 9.6 percent. “On Tuesday, the City approved another Henderson project to develop 910,000 square feet of neo-Gothic style office buildings for £500 million. This is not the first time at the development dance for Smithfield. In 2007, the developer Thornfields secured a long-term lease from the city corporation and planned to raze the buildings and construct an office block. Amid protests from English Heritage, the British government’s adviser on historic properties, and conservation groups, the government called a public hearing and a public inspector overturned the development plan. Thornfields was close to bankruptcy during the financial crisis and Henderson bought the lease in 2010 for an undisclosed amount. According to Mr. Harris, Henderson then spent three years and £10 million to painstakingly develop a “conservation-led” project. It has fixed leaky roofs, strengthened tunnel rails beneath the buildings to the tune of £4 million, reinforced riveted girders and spent $130,000 stabilizing stonework.
The old fish market, which has not been used for 30 years, and the general market, which the rail company uses for several purposes, will be converted into a combination of shops and restaurants, with offices up to five stories high. The project will have 63,000 square feet of retail space and 172,000 square feet of office space. “We have shown integrity here,” Mr. Harris said, adding that 75 percent of the buildings in question would be retained.
To renovate the general market, Henderson will demolish the airy roofs supported on elegant trusses and the central dome. Mr. Harris said much of the historical beauty of the structure was destroyed during World War II. The building was replaced in the 1950s and has never attracted tourists. “I am baffled,” he said wearily. “It was not seen by the public, and it’s not been used for 30 years.”
Mr. Reynolds has a different view. He helped develop Spitalfields, another bustling market, which Ballymore, a Dublin property company, sold to Ashkenazy Acquisition for more than £100 million last year. He says the same can be done with Smithfield if Henderson would accept a similar return on capital but a lower total profit.
“Once these halls are gone, they are gone forever,” he said. Mr. Reynolds called Henderson’s contention that three-quarters of the building will be maintained misleading, though he used a more colorful term, because Henderson counts the basement. The evidence submitted suggests Henderson’s proposal to gut the general market’s roof removes much of the volume of the building.
“You take the middle out of a cathedral, and you don’t have anywhere to sit and pray,” Mr. Reynolds said.
Henderson’s project is being financed by the $70 billion Alberta Investment Management Company, which is investing £1 billion in London real estate. The city corporation approved the plan last summer, with English Heritage, the Design Council CABE, the Commission for Architecture and the Built Environment, and Mayor Boris Johnson of London.
But protests ensued, and Eric Pickles, the communities and local government secretary, called a public hearing, which began last week and ends Friday. The inquiry closes March 7 and the inspector is expected to take up to two months to write his report with a recommendation to the government. Mr. Pickles will then decide whether to accept the recommendation, a process that could take weeks.
One person’s renovation is another’s demolition, and the two sides disagree on nearly everything beyond liking the structures, including the size of the area to be developed, the price of development, the percentage of area to be protected, or even whether “Skyfall,” the 2012 James Bond movie, was filmed in the basement. It was not.
Henderson says the alternative proposal by Save Britain’s Heritage and the Victorian Society is not viable and falls short by £23 million, according to Knight Frank, a property management company Henderson hired.
Mr. Reynolds said Henderson was not accounting for the moral cost of losing a beautiful, historic asset. He said “spreadsheets can be made to dance,” questioning the assumptions made in Henderson’s estimates. He argues that Henderson’s commercial focus is too narrow, while Mr. Harris questions the intellectual depth of the proposal by Save Britain’s Heritage.
Feelings are being hurt. Mr. Harris calls the opposition’s description of their office space as dull “a dangerously provocative misrepresentation.” He says he does not represent the plutocrats, as some have suggested. “I think that’s an inappropriate comment.” And he insists this is not a David versus Goliath battle. “It is entirely inappropriate to demean our skill.”
Henderson has made it clear that if the inspector general rules against it, the company has no intention of selling. So the market would go undeveloped. The opposition has referred to this as “emotional blackmail.”
“The U.K. is open for business,” Mr. Harris said, warning that a vote against the company’s plan could ripple through investment circles. “This could affect investor confidence and sentiment,” he said.
Mr. Reynolds disagreed. He cited 40 years of experience taking rundown buildings and “turning them into something interesting.”
“We are a counterweight to large tenants taking over and changing things.
via:http://www.nytimes.com/2014/02/26/realestate/commercial/battle-over-london-market-raises-larger-development-issues.html?partner=rss&emc=rss
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