Few foresaw the storm which engulfed Bury House, an unassuming London office block nestled just east of the Gherkin, EC3, last autumn. Plans by US developer BentallGreenOak to redevelop it into a 48-storey tower had been recommended for approval by City planning officials earlier in the year. The scheme was to be BREEAM Outstanding and sat firmly within the City’s tall buildings cluster. So far, so good.
But not long before the proposal went to committee, it emerged that its construction could potentially overshadow the UK’s oldest synagogue, the neighbouring Bevis Marks. Natural light is particularly important at the largely candlelit place of worship and, spearheaded by chief rabbi Ephraim Mirvis, Bevis Marks launched a media campaign against the project, prompting thousands of letters of objection from around the globe. Weeks later, City planners rejected the tower by 14 votes to seven.
For Ker Gilchrist, who heads BentallGreenOak’s UK fund, Welput, it was a very public setback during a year of otherwise excellent news. The fund gained planning permission for the UK’s largest fully electric office in Victoria and an ambitious retrofit scheme in Farringdon. It also sold 20 St James’ Street, a prime office refurbishment in the West End, for £118m to Ekistics Property Advisors. But on Bury House, it is back to the drawing board.
The City Corporation’s decision was “a disappointing outcome,” Gilchrist acknowledges. “But we have a very long-term plan for all of our assets. I do not think that [abandoning the scheme] will be the case. We must pause for breath, take an orderly look at the options that are in front of us – and there are options – then work out what is best.”
Since the planning rejection Welput has also bought Holland House, the neighbouring block, from Stena UK. The sitehad a guide price of £40m. The consolidation of holdings around the site could support any future redevelopment plans. Gilchrist, who describes his relationship with Bevis Marks as “healthy”, says it is too early to go into detail, but that the company will work proposals up over the course of 2022.
Nonetheless, given the level of scrutiny afforded to the previous plans, it would surely take something drastically different to win over Bevis Marks and the City Corporation. Picking his words carefully, Gilchrist adds: “It is important to remember that the scheme was recommended [for approval by planning officials]. This is a reminder that the planning process is a complex one. We will get to a conclusion that we are all happy with. So yes, it’s disappointing, but I don’t believe there is anything that can’t be resolved.”
Electric dreams
Perhaps understandably, Gilchrist would rather talk about Welput’s other major project at 105 Victoria Street. Planning permission for the 470,000 sq ft SW1 office block – formerly a House of Fraser department store – was granted in April, when it became the largest single building ever to be granted consent by Westminster Council. It also happens to be all-electric. Construction starts this year, with completion slated for 2026.
Not only this, but Welput has also committed to its energy being supplied from fully renewable sources, with no gas supply and no diesel generator, ensuring zero fossil fuels not just in operation but also during construction. As a result, the building is designed to meet or surpass BREEAM Outstanding, EPC A, and WELL Platinum certifications, and also exceed RIBA’s 2030 sustainability targets.
And, as the retrofit-versus-bulldoze debate grows hotter by the week, the scheme is an outlier in London for being a fully fledged redevelopment that has attracted little criticism on sustainability grounds – largely because of the “highly inefficient” existing building, says Gilchrist.
“We made the decision a while ago to look at each asset over a whole lifespan. If we get the building right it has got a long future ahead. You have to look at how quickly delivering the right building will offset the impact of the actual process of redevelopment, and you would be surprised how quick that can be.”
Having a ground-up development also “gives you the luxury to make a significant commitment to the social agenda”, he continues. In this case, that means providing access to a planned rooftop urban farm, as well as sports facilities for local schools. “A lot of people will talk about their environmental positioning and where they are from a governance perspective. But getting the social agenda right is actually quite hard to do.”
Forensic focus
Despite the massive expenditure going into 105 Victoria Street, which has an estimated £1bn development value, Welput has just seven assets on its books – and that is the way Gilchrist likes it. Having a small portfolio, he says, allows the fund to have “a forensic focus on each building, and know what our tenants are thinking”.
“It is not a simple landlord and tenant relationship anymore – it is service provision,” he adds. “And it is a partnership at the same time.”
He points to 98 Theobalds Road, WC1, a 135,000 sq ft Midtown block which Welput owns and services as Warner Bros’ London HQ, as an example. The fund recently negotiated its third lease restructure with the entertainment giant, something Gilchrist says was possible because of the close relationship between landlord and tenant. (That, and the “rock star” screening room the developer installed for Warner Bros at the last regear.)
“There has been lots of noise about the hospitality impact on offices,” he says. “But it is still a place of work, and the balance can change from submarket to submarket.”
For the managing director, who used to go everywhere in a suit and tie, getting the relationship right has been as simple as dressing more casually to see certain tenants. “When I used to go into our building in Farringdon, tenants would look at me as if I was dressed like Santa Claus. They just don’t operate like that, so we engage with them as such.”
Gilchrist will hope that kind of flexibility stands his team in good stead across the business, not least as it weighs up its next move at Bury House. As he says, there are always options.
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