Baroness with nous has a white elephant to kill

Peter Bill
19.06.09

This week the newly knighted head of the London Development Agency, Sir Peter Rogers, discovered that the organisation he has run for over a year owes £60 million more than previously estimated to dispossessed owners of land compulsorily purchased to build the Olympics.

This news will not please Baroness Margaret Ford. For the Labour peer last month became chair of a new organisation that is to assume the public debts of £600 million or so incurred by Sir Peter's organisation in acquiring the 568 acres.

Not that the 51-year-old Ford need worry. Government valuers estimate housing land in East London is worth £2.5 million an acre today. The LDA seems to have bought 250 more acres than strictly necessary to build the Olympics. But even if you take just the 568 acres of the park itself, the land is worth at least £1.4 billion.

If the plain-speaking Baroness does her job properly, the yet-to-be-named company will one day make a very handsome profit. That is because plans have already been drawn for 12,000 homes, five schools and 1.7 million sq ft of office and light industrial space. This is on top of the various stadiums, the Olympic village and a 500,000 sq ft white elephant to house TV studios.

The legacy company is 50%-owned by the Greater London Authority and 50%-owned by central Government. Ford beat the likes of developer Sir Stuart Lipton and former publisher Clive Hollick to the chair, mainly because of an attribute not given to private-sector moguls.

“Margaret knows in her bones how the public-sector machine works,” says one who worked with Ford at English Partnerships, the now-defunct organisation once responsible for developing homes and factories on redundant public land. “She knows which buttons to push and, crucially, how hard to push them to make things happen.”

Her application will have also been supported by the man running the Olympic Delivery Authority, David Higgins, who was chief executive of English Partnerships, which Ford chaired between 2002 and 2007. The pair got on well.

Ford's first act was to approve the appointment of American Andrew Altman as chief executive of the 2012 legacy company. The former deputy mayor for planning and development in Philadelphia was one of four on the short list — three of them from overseas. “He brings with him a world class reputation” she said. Half a dozen outside directors are being recruited from almost 700 applicants to join a 12-strong board of the business whose 70-80 staff will be located near the Olympic Park. Then work will begin.

The first job for Ford and Altman is to take a second look at the development plans that were drawn up by the LDA and were due to be submitted this summer.

That second look will include re-examining what to do with the stadium, and giving consideration to the previously unthinkable idea of simply knocking down that white elephant — or the International Broadcast Centre as it is officially known.

Peace reigns at LandSecs as foolish idea is finally ditched

The tension between the saintly chief executive of Land Securities, Francis Salway, and his striving development director Mike Hussey was resolved this week with the latter leaving Britain's largest property company.

This final nail in the coffin of the misbegotten strategy to break the company into three bits was hammered in by the scary Alison Carnwath, who has been on the board since 2004 but who only became chairman in November 2008.

All three — along with former chairman and now City minister Paul Myners — share responsibility for the now abandoned idea of breaking up the £9.4 billion business.

The bit that managed other people's property, Trillium, was sold for £750 million last year — about £500 million less than hoped for. That left the £5 billion of London offices destined to become a FTSE 100 plaything in the hands of Hussey, with Salway tending the £4.4 billion portfolio of provincial shops.

It was he who selflessly convinced the board in 2007 that shareholder value would be served by the break-up. Fine, perhaps, in theory: but it proved tough to put into practice an idea that made about as much sense to anyone not on the board as M&S splitting its food and clothing businesses.

The staff disliked an idea which they perceived as driven by Hussey's ambition. Rivals derided it. The industry at large was puzzled that such a well-respected business should voluntarily dismember itself. The credit crunch effectively killed the plan that involved a £3 billion refinancing.

Now Carnwath has crudely signalled her desire for Salway to come up with a new strategy for Land Securities within six months- with the “or else” left hanging. For a business that has seen the value of its assets shrink by £6 billion in two years, the words “protect and survive” come to mind.

Saving the planet and saving cash

A dozen floors up, on one of half a dozen terrace gardens, bees were buzzing gently around banks of deep blue sage and white yarrow. Down in the basement, pea-sized wood pellets were clattering down a four-inch pipe into a furnace no bigger than a G-Wiz electric car.

Such are the unusual sights and sounds of today's planet-saving office blocks. The one visited this week is called Ropemaker, 20 storeys next to Chiswell Street Brewery.

British Land is the developer of the 586,000 sq ft Arup-designed block, which is now finished and 40% let.

Those renting space will save more than the planet: they will save on their utilities bills, says Paul Burgess, head of London leasing at Britain's second-largest property company.

He says running costs will be up to 20% less than those of a conventional 1980s office block. “Potential tenants tend not to ask. However, they won't even come and look unless the space ticks all the green boxes.”

Restaurant to the taste of many...

Now is probably not the best time to open a restaurant that will feed from MP's expenses. But the Royal Institution of Chartered Surveyors has just leased a part of the ground floor of its headquarters on the corner of Parliament Square and Great George Street to the Roux brothers, Albert and Michel.

The Gavroche owners are letting their respective sons Michel Jr and Alain run Number 10 Great George Street, which opens in October. MPs will be pleased, and the surveyors will be happy to get the rent plus in-house catering. No doubt the judges at the new Supreme Court, which opens in Parliament Square in October, will also be happy. No 10 (geddit?) will even have its own front door on Great George Street to prevent cross-contamination between surveyors and politicians.