Argent’s £2bn King’s Cross Central scheme cleared another couple of hurdles last month. Camden council planning committee resolved to grant planning permission, subject to section 106 agreements, and London mayor Ken Livingstone last week gave his backing. It must now gain approval from the ODPM, and complete the judicial review process.
Developer Argent has been involved for six years. “It feels as though we have lived with it for a long time,” says Roger Madelin, chief executive of Argent. “It’s an important step, but approval is only the first step on a long journey.”
It is an important time too for London & Continental Railways, which along with DHL Logistics owns the land that accommodates the scheme. Madelin expects LCR, which is also involved with the Olympics in east London, to remain involved in the development process.
If the remaining hurdles are cleared, Madelin has scheduled a start on site for the end of 2007, with the first phase complete by 2010.
There is a lot of admiration and goodwill for the scheme, not least among other developers that have taken a gamble on the King’s Cross Central being a success and are bringing other developments forward (see map).
King’s Cross has much going for it. With its public transport links, including two mainline rail terminals and six tube lines, it is surprising regeneration was not started years ago. Some commentators say that securing the Channel Tunnel Rail Link into St Pancras has done a great deal to put the area back on the radar. But how easy will it be for Argent and other developers to turn King’s Cross around, attracting businesses and ultimately regenerate one of London’s sleazy districts?
Several key fringe developments in London in recent years have occurred along improved transport routes. For example, one factor behind the reinvigoration of the South Bank was the extension to the Jubilee line; Paddington has benefited from the direct rail link to Heathrow airport; and Docklands has been helped, first by the Docklands Light Railway, then the Jubilee line extension and, most recently, the DLR extension to City airport.
Mark Charlton, head of research at Colliers CRE, says: “It took transport improvements and a critical mass to establish South Bank rents at around £40 per sq ft, but rents leapt from the late £20s/low £30s per sq ft within two years.”
A report into development between 1992 and 2002 said Transport for London estimated that property values close to Southwark station grew in total by around £2.1bn.
Charlton believes a similar pattern will be followed at King’s Cross. Already the letting at King’s Place to the Guardian Media Group has achieved around £34.50 per sq ft, almost £10 per sq ft more than levels normally paid.
“Through 2006, as King’s Place gets closer to completion, the area’s infrastructure and ambience will be improving,” he says. “We expect that quoting rents for the remaining space will be at least £40 per sq ft – the same as Paddington now – and prime rents in the area will climb to £45 per sq ft by 2007.”
Charlton believes that a regenerated King’s Cross will be a stronger location than Paddington, with rents growing to 5-10% above that achieved at its western neighbour.
Of course, all of this is dependent on the economy remaining stable. Past experience shows that fringe locations tend to lose out when the market is slow, as occupiers are in a position to hammer out more favourable deals in prime locations.
Colliers CRE has given Estates Gazette exclusive access to research into the prospects and opportunities of King’s Cross. The research focused on the correlation between increases in the area’s property values and improvements to its infrastructure, and where demand might come from.
The economic forecasts are positive. According to Charlton, even the most conservative forecasts estimate that growth in employment in London will require the development of 80m-100m sq ft of office space between 2001 and 2016. “This scale of development will need to be absorbed in central London fringe markets,” says Colliers CRE’s report.
Some 5.9m sq ft of office space is already planned or under construction in the King’s Cross area – an amount that is larger than most West End submarkets, and a similar size to the eastern city fringe.
Development at King’s Cross has already gone head to head with the more established South Bank in securing a prelet to the Guardian. The real test for King’s Cross will be attracting financial and business services companies, the sectors within which the majority of employment growth is expected.
Andrew Bull, European director of LaSalle Investment Management, which bought two chunks of the mixed-use Regent Quarter scheme, next to King’s Cross, last year, says: “We expect to attract professionals and creatives but wouldn’t discount government and multinationals. There is still a lot of empty space in the City so that would be the first place finance companies would go.”
Charlton is cautiously optimistic: “It is not beyond the realms of possibility that King’s Cross Central could attract financial service companies. Rents are still going to be at a discount, and it goes back to providing the type of space occupiers want.”There is no doubt that King’s Cross Central deserves the attention it is now getting.The success of its regeneration is in developers’ hands – helped by a healthy dose of economic stability.
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● Employment in London is expected to increase by 200,000 by 2008 ● Number of people using the Underground during the morning peak is expected to increase from 55,000 to around 82,000 by 2007 ● More than 63m passengers are expected to pass through King’s Cross/St Pancras by 2022 ● Employment near transport hubs would help alleviate the cost of transport delays in central London, estimated by businesses to cost £2.5bn pa – £1,740 per employee ● 94% of employers believe staff productivity is reduced by transport delays, with much of the problem caused by multiple “trip stages” Source: Oxford Economic Forecasting, Colliers CRE, GLA Economics |
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The estate agents’ descriptions would read “well placed for central London and superb public transport links”, but up until a few years ago, King’s Cross was not enough to tempt even the bravest developer or investor, let alone upmarket residential agents such as Knight Frank. There was little or no new-build to test prices, and rental levels were such that they appealed to the less salubrious members of society. But what a difference the prospect of the Channel Tunnel Rail Link and a huge regeneration project can make. Last year, Knight Frank was asked to advise London & Regional Property Fund on its plans for a modest nine-unit residential redevelopment on Britannia Street, near King’s Cross station – its first foray into the King’s Cross market. Andrew Jones, head of residential development at Knight Frank, says: “I’ve always been in favour of the area. In the past two or three years, values have increased by about 15%. It has kept up and probably exceeded all other areas.” He points out that London & Continental Railway’s residential conversion of the former Grade I listed Midland Hotel is exceeding local values by 25-30%, and new-build values are twice that of secondhand. “I still feel there is growth in King’s Cross – 20% over the next five years,” says Jones. “If you look at it on an A-Z, it’s absolutely prime, but you aren’t paying West End prices. As of next year, you can be in Paris in two-and-a-quarter hours.” Knight Frank is not alone in seeing the potential of the residential market. Savills has sold all bar two of the 142 flats at the P&O Developments/LaSalle Investment Management-owned Regent Quarter, next to King’s Cross. Camden council has planning applications for 1,700 flats. This figure will double. |
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Argent’s proposals have attracted other developers to the area, increasing the scope of regeneration |
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● 67 acres ● London & Continental Railways and DHL Logistics are landowners, Argent is developer ● £2bn, 8m sq ft of mixed-use development of which 4.9m sq ft is commercial ● 1,946 homes, 500,000 sq ft retail,50 restaurants ● 40%, or 27 acres, will be public realm ● 20 new streets and 50 new buildings |
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● 5.8 acres developed in four quarters by P&O Developments, completed June 2005 ● LaSalle Investment Management bought Quarters B and C in 2005 ● £150m mixed-use with 200,000 sq ft offices, 142 homes, 64,000 sq ft of shops, 8,800 sq ft of restaurants and a 277-bed hotel |
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● Parabola Land is developer of the1.5-acre site ● 553,300 sq ft scheme comprising 382,000 sq ft of offices, restaurants, bars, an art gallery and 425-seat concert hall ● 150,000 sq ft prelet to the Guardian Media Group at around £34.50 per sq ft ● Due for completion in April 2008 |
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● Blackstone’s redevelopment of the 180,000 sq ft former RBS/NatWest offices ● Mixed-use scheme comprising 64 homes and 835 student accommodation units as well as leisure uses |
