Displaying items by tag: financial
Wednesday, 16 September 2009 09:46

Past, Present, Future

Canary-Wharf-215It’s not surprising that Canary Wharf leaves some Londoners scratching their heads. As a place, it doesn’t particularly look or feel like it belongs in London, nor does it have any of the city’s higgledy piggledy charms. In fact, one might say it has the opposite effect – almost as if a North American city, a miniature Dallas, let’s say, has landed like an alien spaceship on top of what used to be the Docklands of east London, but is now part of another dimension.The reality, it could reasonably be argued, isn’t far off.

 

What was previously a wilderness of derelict industrial buildings centred on the old West India Docks has been, over a relatively short period of time, utterly transformed. Flash forward from 1988, when the foundation of One Canada Square was first laid down, and you now find a group of skyscrapers and concrete canyons home to one of the foremost financial centres in the world – a corporate workplace bubble with 1.4m sq m of office space, and a formidable rival to the Square Mile. Disused factories and warehouses have given way to bank headquarters and All Bar Ones and, from a certain perspective, the area has been successfully regenerated.

 

Yet, 20 years later, as the sun rose and set on the Docklands skyline, painting its towers that shimmering gold east Londoners had grown accustomed to seeing, the irony was painfully clear. Almost overnight, Canary Wharf had morphed into a symbol for what was going spectacularly wrong. With banks folding and the economy collapsing under us like so many wooden toothpicks, the light atop the tallest building in the UK now flashed like a warning sign and the questions sprouted up like mushrooms. Is Canary Wharf as outdated as the boom-and-bust financial model it had supported for two decades, and how will it change in light of the downturn, if at all? Are we comfortable with the precedent it has set for new developments in London and other parts of the UK? And most significantly, why does it feel so… artificial?

Of course there are no immediate answers to these questions but going back to the beginning helps to make sense of Canary Wharf as a place, which has been controversial from the point the Isle of Dogs was designated an ‘Enterprise Zone’ in the early 1980s. Local people felt inherently suspicious of it. Others were (and still are) dubious of the political context that gave it shape. Still, despite this and the collapse of the commercial property market in the early 1990s, it gathered momentum and eventually was accepted as a necessary evolution in London office design – a flagship for a new British economy.

Transport links came in and more office towers went up in Churchill Place, Canada Square, North Collonade, Bank Street and beyond. Banking giants including Barclays, HSBC and Citigroup, plus major media companies such as Reuters and The Independent also made Docklands their home.

“Canary Wharf was brilliantly timed,” says Frank Duffy, architect and founder of the workplace consultancy DEGW. “Suddenly it was possible to shift money around the world at lightning speed and London was terribly short of good office space. It was a time of great excitement and things moving forward.”

Following the deregulation of the London Stock Exchange in 1986, the financial services industry throttled forward and needed the architecture to accommodate it. Global investment banks required vast floor plates to conduct business – and property developers were chomping at the bit.

Docklands had more or less lain dormant for a decade and it was here that the Thatcher government encouraged growth via one of its (now defunct) Urban Development Corporations (UDCs) – public bodies, often chaired by property developers, which could give tax breaks and drastically loosen planning permission in designated areas for regeneration. This meant that vast areas of cities, in this case Docklands, could be lumped together and owned privately, with very little planning restrictions on new buildings. The result is a kind of city within a city, and may be a core reason why Canary Wharf is criticized for not being properly integrated into its surroundings.

According to Anna Minton, author of the recently published Ground Control, a book examining the impact of privately owned developments on UK cities, these UDCs laid the framework for Canary Wharf and what she calls “the architecture of extreme capitalism”, which has popped up in Newcastle, Liverpool, Bristol, Leicester and other ‘regenerated’ industrial areas around the country.

Minton’s main argument is that this most recent financial meltdown is a time to take stock in places like Canary Wharf. Does it deliver what we need in business and as a society?

“There is a very stark division between Canary Wharf and the Isle of Dogs – that was predicted when it was put into place,” says Minton. “The whole premise of Thatcher’s ‘Trickle Down’ theory to the sections of the community who need it is a complete fallacy.

“My main problem is this is the model for every new development around the country. It’s an economic model that doesn’t work – it’s based on debt, high rents and service charges. I’m not saying Docklands should be repopulated by artists’ studios and roof gardens – but we do need to admit to ourselves that there is a big problem with the way we’re doing things. I don’t think we should blindly follow in its footsteps.”

Beyond the philosophical argument, there is no doubt that Docklands has proved vulnerable to economic shock. Its first owners, Olympia and York, had to be rescued from bankruptcy in 1992 and the development was severely affected by a financial downturn at the beginning of the noughties.

The recent figures also paint a picture of uncertainty. According to James Roberts, head of research for letting agents Knight Frank, vacancy rates in Canary Wharf are running at 11.9 per cent, which is quite a rise from Canary Wharf Group’s own figure at the end of 2008 of .03 per cent. Roberts adds that rental values for prime space have dropped 30 per cent (from £50 to £35 per square foot) from their peak in 2007.

“When the banks were expanding, they were taking really large chunks of space, and now there is more space coming onto the market than is coming off,” he says.

Kelvin Davidson, property economist for Capital Economics, predicts that rental values across the city of London, including Canary Wharf, will fall further because of low demand and a surplus of space.

What’s more, tenants are using space more efficiently. Paul Statham, managing director for RNM Systems, which produces Condeco, a workplace management software, says his company’s turnover has risen by 80 per cent in the last year. Three major banks in Canary Wharf, including Barclays, have employed RNM to help them better manage their space. Another RNM client reduced their space by half, says Statham.

“The cost savings are obvious if you don’t have to buy another office building when you’ve reached capacity,” he says. “We have lots of clients that have looked at their real estate and had to reassess – you simply can’t afford to have empty office space, so you have to reduce it.”

Some of this is down to a new approach to work, he adds. “People don’t need a desk, the culture has changed and I think going into the next five or ten years, they won’t need to have a physical presence – they can have a virtual presence.”

But as a spokesman for Canary Wharf Group was keen to point out, in the midst of the disintegration of Lehman Brothers, a £237m deal was secured with JP Morgan, which is due to develop a building in Docklands for its European headquarters to be completed in 2012.

Nomura’s announcement that it will move out of Canary Wharf and into the City next year does come as a blow despite Canary Wharf Group’s four- year insurance cover for potential rent defaults. It raises the question of whether some firms would like to disassociate themselves with Canary Wharf following the financial collapse.

A Nomura spokesperson said the decision to move “was the final step away from the transaction a year ago” (meaning the demise of Lehman Brothers, where Nomura acted as administrators) but also that the City was “more convenient” and “made more sense”.

So how will all of this uncertainty affect things like leases? Knight Frank’s Roberts expects lease lengths to be more flexible, and likely shortened for sublets as occupants expand and contract depending on the economy. Kelvin Davidson adds: “People signed into long leases aren’t going to break them although more and more are opting for break clauses, and that ups the risk of losing tenants.”

Interestingly, shorter leases and dropping rents mean a potential diversification of occupants – which could add a new texture to life at Canary Wharf, and possibly a welcome one. Advertising, construction, media, IT and public sector organisations including the 2012 Olympics organisers, Crossrail and a branch of the Metropolitan Police have leased space: “You are seeing some new tenants moving into the Wharf – but you couldn’t say that the new activity is compensating for the losses during the financial crisis,” Roberts reminds us.

Still, the financial crisis has halted several large-scale building projects in other parts of London, and a sharp decline in planning them, which implies that in a few years there might be a shortage of office space – and therefore a development like Canary Wharf is well positioned to reap the benefit.

Davidson agrees: “There will be a point when much of that vacant space is absorbed and rental values will rise again – and developers will respond by building. History shows that legs are built into the system – it’s all very cyclical.”

However, Songbird Estates Ltd, CWG’s majority shareholder, was forced to refinance last month so as not to breach Citi loan covenants of £880m.

So is it good news or bad news for Canary Wharf? It’s still a question for those hoping the credit crunch would induce a radical change in the commercial property market and the industries that fuel it.

Paul Burgess, a director for British Land, believes that the systemic changes happening now, ‘post-crunch’, could potentially have a profound impact on the next generation of office buildings in London. Floor plate size, configuration and specification will all be influenced by the needs of a wider net of occupiers, he says, and the possibility of a more regulated financial industry would mean a new approach to designing buildings.

It’s a shift that Frank Duffy would welcome, although he questions whether it would go far enough to accommodate a whole range of patterns of use within the ‘knowledge economy’. Existing office buildings are a redundant idea, he suggests, and are not sustainable in the long run. In the future, successful buildings will be more permeable and able to shift, for example, from office, to flats, to retail – and will complement and engage with their surroundings more than now.

“The weakness of a development like Canary Wharf is that those buildings were designed in an architectural tradition of mono-functionality. They do one job, they’re brittle – they can’t accommodate change,” Duffy explains. The developers got it right at a certain moment in time, he says, but we need to ask ourselves what happens after ten, 20 or even 75 years and how these buildings can potentially be used in other ways.

“The genie is out of the bottle. You do not have to go to work to work,” he says. “The question is how do you justify ‘place’ in an increasingly technologically connected world? Now you have highly mobile people who are not working in the patterns of the 20th century. Which formula would you put your money on for the preferred model of the 21st century? I don’t think that model is Canary Wharf or any office building as we know it.”

Published in Features
Tuesday, 15 September 2009 12:14

Opportunities in a downturn

Gill-Parker-2a-215Gill Parker, joint managing director of BDGworkfutures, explains how office design can aid staff morale while we wait for the tide to turn.

Major downturns in the economy such as the one we are currently experiencing are surrounded by uncertainty. While I hope, along with everyone else, that the economic climate will improve (and quickly!) I also hope that it won’t ever be the same again – or it will mean that we have learned and gained nothing from our experiences in the last few months.Many office schemes are on ice until an upturn is evident, which means that the role of the designer in managing real estate is changing. The financial meltdown has left many organisations with no other option than to make redundancies in order to keep them solvent. While this is terrible for those who lose their jobs, it can also be pretty grim for those left behind. It is often a shocking reminder for these people that they are there for the business – and not the other way around.Employee morale is possibly one of the most delicate and intangible elements of a workplace. The inertia of management can quickly have a dramatic affect upon the remaining members of staff. It is at this moment that the design of a space becomes crucial as the most visible indicator of how the business will be restructured. Empty Desk Syndrome (EDS) is one of the most conspicuous consequences of redundancies. A suddenly empty office is a constant visual reminder of absent colleagues and an uncertain future, all of which is incredibly unsettling. However, the impact of this can be minimised with the careful and thoughtful planning of a skilled designer. The office should be reconfigured as soon as possible to ensure that the employees are sitting together without huge voids inbetween teams. Getting employees to work in closer proximity creates opportunities for them to mix and results in a more dynamic working environment than having pockets of people physically separated by empty desks. Some organisations even take the additional step of closing whole areas or wings of building if the option of subletting is not available. When space is being replanned, be aware of the shifting adjacencies of people and departments – think positively, however, and it could provide a great opportunity to bring previously disparate arms of a business closer together, sharing knowledge and possibly discovering a renewed appreciation for different skill sets.Although budgets are constrained at times of redundancies, money spent wisely on creating improved break-out spaces and informal meeting areas can have a very positive effect. Spending time and a little money to create a better working environment will be a display of management confidence in the future. Add to that small details such as free fresh fruit and decent organic coffee and it can really make a difference. Consolidation is of course a priority, but for those with some resources it can be an ideal time to start piloting and testing flexible working scenarios. This can take many different forms – from home working to desk sharing. If handled well, this can give employees greater choice in their work-life balance as well as providing a strategy for future property portfolio management. When under financial pressure and strain it is very easy to fall into the trap of making quick fix decisions to ease immediate pain, but it is vital to keep focused on the long term. Flexibility and efficiency is key. Supporting staff with what they need in a well-designed environment can energise a workforce and prepare it for the future – surely vital attributes of any successful business in this tough climate.

Published in News
Tuesday, 17 June 2008 16:52

The sky's the limit

skyThere is something incongruous about the word “greenscraper”. Even though it slips easily into architectural vernacular, it is a difficult term with which to grapple.On the one hand, Foster + Partners’ new high rise is the fourth tallest skyscraper in London’s Square Mile. The Willis Building is bold and brash, boasts more than 5,000 tonnes of steel and has piled foundations the length of four-and-a-half London buses. Twenty-one high-speed lifts travel the 125m-high building at 15 miles per hour, taking staff from the ground to the top floor in a matter of seconds. Thirty thousand people spent a total of 1.5 million man-hours taking the project from inception to completion.But the building excels in terms of its BREEAM (Building Research Establishment Environmental Assessment Method) ratings and was awarded 10/10 for its low energy consumption. The high standards of sustainable construction were also commended – material from the demolition of the building was recycled and crushed for use in the foundations of the new structure, reducing both wastage and road miles.The glass facade incorporates high-efficiency double-glazing, and the distinctive saw-tooth design – apart from enhancing the silhouette – prevents overheating, reduces the usage of air-conditioning and optimises the amount of natural light coming into the building. Only about one in five new builds achieves excellence in its BREEAM rating, with the proportion in London far lower. For a skyscraper to achieve it is a particularly tall order. But if any building was going to hit such heights, it was going to be the Willis Building. The team behind this new addition to the London skyline is the architectural equivalent of a super-group, with Foster at the helm, British Land as the developer, Stanhope as the manager and global insurance broking company Willis laying claim to the whole tower.The green theme is at the heart of the structure. StructureTone, the company behind the fit out, managed to carbon offset the project in keeping with the core build. The building is the UK’s first Forestry Stewardship Council-accredited fit out and a wide range of initiatives were introduced to reduce the carbon footprint of the development. These included a 50 per cent decrease in the haulage of CO2 through the use of a consolidation centre, and a recycling rate of over 85 per cent. Mineral fibre tiles, which produce 80 times less CO2 than their metal equivalent, were used in the ceiling.Foster + Partners designed the lift lobby, a show-stopping glossy affair with mood lighting and reflective ceilings, giving a modernising effect to the rest of the fit out.The interior of the building is a corporate fit out to suit a high-end insurance broker. Designed by Swanke Hayden Connell Architects, it includes a 375-seat auditorium, a fully equipped gym and restaurant to accommodate the 2,000 plus staff with its own outdoor terrace.The three roof terraces are a highlight of the finished build. The highest and most impressive, the Client Advocate roof terrace, is used for corporate entertainment and dining, and takes in views of the whole of the city. The statement, however, is in the building – and it is most definitely a trumpet blow that will be heard across the City. In 2007, Willis’ New York division moved into first-class office space at One Financial Centre. Lloyds previously occupied the company’s London site, at 51 Lime Street, before it moved to 1 Lime Street, opposite the new development. Willis really is placing itself at the heart of the insurance sector.When developer British Land was looking for a tenant for the new build and approached Willis, some unusual adjustments had to be made. The insurance broker wanted a tower that it could occupy exclusively. British Land’s head of London leasing, Paul Burgess, says: “It was probably the first time we had ever gone to the city planner and asked to make a build smaller.”The changes went ahead; it was a collaboration that everyone wanted in on.The project is not the first time Willis has worked with Foster + Partners. The three-storey Willis Building in Ipswich was designed by the company’s previous incarnation, Foster Associates, in 1974, and given Listed status in 1991.The new headquarters have been developed as a series of overlapping curved shells, with the sections arranged in three steps. Roof terraces overlooking London are directly accessible from three floors of the office tower. More than 2,000 Willis staff, from four offices across London, have moved into the 28-storey build.An adjacent nine-storey building, 1 Fenchurch, which is part of the same development, has been part let to a law firm. Both buildings have an open and integrated area at street level, more in keeping with nearby Leadenhall Market with its shops and cafes than a financial district.The smaller building’s concave facade shapes the public plaza that both buildings step down to. Its curved corners maintain important view corridors, as well as reinstating a historic route through the site. A fringe of shops, cafes and bars at its base, together with linear seating and landscaping, combine to enhance the public realm.Both buildings have a central core to provide open floorplates and maximum flexibility in use. The entire development is unified visually by its highly reflective facade.The Willis Building won the 2007 New City Architecture Award, not only for its architectural form, but also for its contribution to the streetscape of the City. Chief executive Joe Plumeri says that for a global giant such as Willis, the move also shows commitment to London as one of the world’s leading financial centres. “I have no idea what the BREEAM means, but I am guessing that it is a real good thing.” For him, it is about modernising – and standing tall. The glass structure certainly achieves both these goals.

Published in Projects

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