Traditionally, Croydon council has emphasised the Surrey town’s links to the nation’s capital, which looms over it from the north. Croydon, the council has frequently argued, is so well-connected by rail to central London that it is an ideal place for major companies to locate their offices, keep their fingers on the capital’s pulse, yet save a fortune in rent.
The most headline-grabbing example of the leadership’s efforts to promote these links was architect Will Alsop’s 2007 masterplan for a £3.5bn makeover that would turn Croydon into London’s “third city”.
Now, however, the borough has joined forces with its southern neighbours – Brighton and Hove council, the Gatwick Diamond business area and West Sussex council – to form the Coast-to-Capital Local Enterprise Partnership. The initiative is one of the first LEPs – the coalition government’s replacements for regional development agencies – to be given the green light.
But does this realignment represent a change in direction for Croydon’s future economic growth?
Regional growth
John Rouse, the council’s chief executive, argues that the LEP will not weaken the town’s ties to the capital. Instead, he insists that Croydon will prove to be “Janus-like”, referring to the dual-headed Roman god who looks both forward and backward through time.
“If we want to protect the brand, then it is to our benefit to look towards London and the LEP region equally,” he says.
The LEP hopes to use a share of the government’s regional growth fund to produce an additional £1.3bn pa of GVA for the region, export growth of £910m pa and handle a reduction in public sector jobs from 27% to 21% of the local workforce. It also aims to help to create an additional 900 businesses.
According to Rouse, in terms of development, the major employment areas within the LEP complement rather than rival one another, which is the principal reason why the LEP should be able to make a compelling case for money from the RGF.
“If you look at the shared economy, we are not competing, employment-wise,” he says. “Gatwick is more transport-related, Brighton is strong in the creative and digital economies, and we have a mixed offer of significant public sector and private sector employers.”
He adds: “Bidding for regional growth funding will be hugely competitive, and the government will be looking for areas that can stimulate economic growth in the private sector to soak up public sector job losses. We have a corridor that will be able to initiate rapid growth.”
The question on property people’s lips is whether joining the LEP will help the council to get Croydon’s long-awaited regeneration off the ground. Over the years, the town has earned a reputation for harbouring grandiose development aspirations that do not make it off the drawing board.
At the Develop Croydon conference last November – an event led by businesses trying to provoke development in the area – Rouse was characteristically candid about past failures, but adamant that the situation was changing.
“We have missed opportunities through being overambitious, making poor decisions about which developments we were going to back, and inflexibility,” he says. “Things are not like that in Croydon any more. We have proved that we are flexible and open for business.”
Central to Rouse’s and Croydon’s aspirations are five masterplans at various stages of completion that aim to take a more practical attitude towards the town’s most troubled and strategically important sites. This more practical approach is clearly a necessary response to the economic downturn and swingeing cuts to local authority budgets.
Distinct corridor
Property experts agree with the wisdom of strengthening ties with Croydon’s southern neighbours in order to add weight to such regeneration proposals, but they argue that an emphasis on snagging London-bound requirements will remain crucial.
Knight Frank partner Will Foster says: “Coast-to-Capital is what it says it is, and rightly so. There is a distinct corridor at play around the M23, which is, most importantly, linked by the railways. Over the years, we have seen a lot of occupiers move within the corridor from London to Croydon and then out to areas such as Redhill and Crawley.”
Foster explains such moves as being businesses’ response to the need to find extra space, aside from a London headquarters, on a cost-effective basis.
He points to notable examples of occupiers with offices both in London’s Victoria area and the towns linked by the rail network along the route out to Gatwick, such as American Express, which has large bases in Brighton and on London’s Buckingham Palace Road.
“AIG is in Croydon and the City,” adds Foster. “Rentokil has offices both in East Grinstead and in Gatwick. There is a long-term trend for businesses to be comparatively footloose in taking space across the corridor.”
At the top of agents’ lists of potential occupiers for the region are government departments moving out of Whitehall as part of efficiency drives by the Government Property Unit.
Chris Hiatt, chairman of Jones Lang LaSalle’s national office agency team, says Croydon is well placed to be the “ringmaster” for relocations now that the coalition government is focused on moving into cheaper locations that remain relatively close to the capital.
“Croydon could fare well as the government focuses on new premises for departments. We understand that the GPU is particularly considering Croydon and Stratford , and that once its first two property vehicles are launched this year, it will look seriously in those areas.”
Rouse confirms that the council has spoken to GPU head John McCready and his team. “We expect that within eight to nine months requirements will be announced by the Cabinet that are open to all-comers,” he says.
But rather than create a united front from the towns that comprise it, is there a danger that the LEP members will clash over their long-term aspirations on issues such as transport and infrastructure?
“There have already been good meetings between the leaders and chief executives to review progress, and we have agreed on a set of priorities,” Rouse says. “There will be tensions working together in the area, but in the end we will achieve a lot more by working collaboratively than we do promoting projects individually.”
Nestlé and Network Rail spark developer scramble
Office requirements for Nestlé and Network Rail are getting developers in Croydon hot under the collar.
Interest in Nestlé was prompted last October when the council appointed GVA to help find the veteran local occupier new premises after it had threatened to consider locations in east London’s Royal Docks or west London’s Park Royal.
Nestlé has subsequently spoken to all landlords with potential locations for its 80,000-100,000 sq ft requirement.
But despite the bluster, Savills’ Tom Mellows says that Nestlé has been quiet about its intentions since the beginning of the year. “The council is clearly keen to retain Nestlé, but it is a complex move,” he says.
Meanwhile, Network Rail, advised by King Sturge, is in the early stages of deciding whether Croydon is the place to be for the firm’s circa 100,000 sq ft requirement, or if its Milton Keynes HQ would be best placed to accommodate it.
The key developers chasing the requirements are Terrace Hill, for its Chroma scheme at 100 George Street, which could accommodate up to 258,000 sq ft; Stanhope and Schroders for the Ruskin Square scheme at East Croydon station; as well as CBRE Investors’ Prospect First; Mapeley’s Delta Point; and Union Investment’s Impact House.
Chris Hiatt, chairman of Jones Lang LaSalle’s national office agency team, says: “Either letting would be a great way to kick-start a major new office development in Croydon, but there are difficulties. Rents in Croydon are in the low £20s per sq ft, whereas to make a new development stack up, rents need to be £27 per sq ft upwards.”
