A decommissioned gasworks site. It’s not the most obvious selling point for a perfect location for residential development. The thing is, it really should be. Aside from a spot of contaminated land to clean up, potentially complex and sprawling sites and the evocation of a dark, grim industrial past, it is this very history that could see these locations up and down the UK becoming some of the most desirable in the country.
“Think about it,” says Malcolm Cooper, National Grid’s head of property.
“In Victorian times gas was created by burning coal – the gas was then distributed. So gasworks had to be central. They had to be near key cities and urban hubs. The coal was brought in by barge and by boat. So the majority of these sites are well connected, in central locations with a river or canal frontage. Which is what people look for these days in the most popular commercial and residential developments.”
Cooper’s main role is to oversee the management and sell off of a swathe of the National Grid’s 600 such sites totalling around 1,000 acres across the UK. That’s enough space for the development of tens of thousands of homes, with 12,000 in London alone. Activity has been hotting up in 2014. Last month, the group announced the sale of the five-acre Battersea Gas Holder site to Berkeley Group’s St James division for around £75m for 750 homes. And last month it announced plans to sell the 12.3-acre Haringey Heartlands, N8, site for a £300m mixed-use redevelopment opportunity.
Cooper says that the plan is to have sold off the majority of the surplus land in the next 10 years through an ongoing strategy involving joint ventures with developers on bigger sites. He adds that the next step is to attract international investors and developers to some of the group’s trophy plots, including the 17 acres in Fulham, which will be brought to market in the next six to nine months.
As the National Grid land sale hots up, Cooper reveals what he is looking for in developers and housebuilders to work with on sites set to come to the market and weighs up the complexity of these old industrial plots against the benefits of central land for a fast urbanisation population.
Double role
Cooper’s role at National Grid, where he has been since the late 1980s – “It was only meant to be for a couple of years. Things so rarely work out like that” – is twofold. He heads up the group’s tax and treasury division as well as overseeing the property arm of the business. And now has never been a busier time in terms of the latter.
“The 600 sites I mentioned are now typically redundant in terms of industrial use and obviously their decommissioning frees up an awful lot of land. This is at a time when the value of land and housing in the UK has never been higher on the agenda. So we are focused on bringing these sites back into use for urban regeneration.
“In London and the South East – where we have 300 acres and 170 acres of surplus land respectively – this could be particularly crucial.”
The group has identified 70 sites large enough for joint ventures in and around the capital, many in prime locations which, in the current climate, should be enough to see developers biting National Grid’s hand off for a chance to get involved. But the process is a slow one. The land is often contaminated and needs to be cleaned up. Surplus equipment must either be knocked down or rationalised. It is clear that the benefits will ultimately outweigh the stumbling blocks for the end user with the provision of more homes and mixed-use development. But what about for the developer?
Sites for sore eyes
The complex nature of the sites certainly does not seem to be adversely affecting their sale. Companies from Berkeley Homes to Redrow have been clamouring to snap up National Grid plots. And there is one particular plot due to come on to the market in the next year that is likely to cause even more of a rush.
The 17-acre Imperial Road site in Fulham, SW6, is one of the group’s biggest trophy plots. Positioned in between the River Thames and the King’s Road, Cooper reveals that the group will be actively marketing the land to international investors and developers as well as those in the UK.
“It really is an exceptional site,” he says. “The location is spot on, and I think this is the type of plot that could stir up some international interest. It will be a good way to market what National Grid has to offer further afield. Looking at the types of sites international buyers have been interested in, I think this could be very significant. It is one of the biggest sites in that part of London.”
It will be down, in part, to Deloitte Real Estate as the agent on the site to market overseas. And, despite some delay on introducing the plot to the market thanks to obstacles in the form of listed structures and demolition of operational mains and gas holder structures, the land is now on the cusp of being sale ready.
But Cooper is quick to reassure developers closer to home that it will not become a case of UK companies being pushed out in favour of overseas funds. Apart from anything else, National Grid only has a few sites that would attract the right attention from outside the UK.
“International investors are looking at prime central London sites,” Cooper says. “So Fulham is a good one to market overseas. I can’t see the Malaysians flocking to Borehamwood or Chelmsford for now.”
Venturing forth
And it’s not just the headline-grabbing prime plots that are attracting attention. The returns on pretty much all of these sites are lucrative, whether they are in Fulham or just off the Firth of Forth in Scotland. So it is hardly a surprise that the property sector is keen to get in on the action.
Cooper says he is ultimately looking for companies he can work alongside for the long term as some of the sites will take years to bring back to life. And he says he prefers developers he trusts and has worked with before and who he knows are able to manage large, often complicated sites. But that does not mean National Grid will turn its back on fresh blood.
“We are absolutely interested in working with new firms on joint ventures. We have enough coming up in the next few years,” he says.
“We do like to work with developers and housebuilders that we know and trust but we are always open to bids from new companies with evidence they could handle the site.”
Cooper says: “I can see why property professionals like to keep an eye on what we are doing. The regeneration of these sites will have a huge effect on the value of the land, particularly when the UK is urbanising so quickly. We are a small country in relation to the population and people still need somewhere to live. The trend of moving out to the suburbs that we witnessed more than half a century ago is reversing. People are moving back to the cities – and at an incredible rate. And most of our sites, whether they are in London and the South East or in the North and Scotland, are well positioned to respond to this trend.”
As for the complexity of some of the plots, Cooper says this simply means his focus is to work with developers and house builders that have the right strategy in place.
He says: “Some developers do not like the complicated nature of some of the land, and that is why it is important we work with the right people. For example, we have a huge site in Southall, West London, at the moment, but it has limited access and there are some hurdles. So we need to work with a developer who is capable of delivering a road to improve access and who can manage that site effectively. That is why we tend to work with bigger companies on our larger plots. And our returns meet their expectations. That is why we keep on getting companies bidding.”
And when there is a rare river-fronted view on a prime site ready for redevelopment in between the River Thames and the King’s Road – who wouldn’t? Decommisioned gasworks site or not.
Emily.Wright@estatesgazette.com
