Friday Letter Letter from London

This week milestones were reached for the London skyline as the Shard – Western Europe’s tallest tower - was inaugurated and Battersea Power Station was sold once again.

The journey of any large-scale development is marked out by a series of key 'events', according to Irvine Sellar, the head of the development company behind London’s now-iconic Shard building, which was yesterday subject to a spectacular light show inauguration ceremony.

With the aid of 12 lasers and 30 searchlights, the London Symphony Orchestra and a splattering of mainstream television news coverage, Sellar and his equity and financing partners from the State of Qatar and Qatar National Bank, were able to celebrate the culmination of 12 years of ‘events’.

From Sellar’s original purchase of the London Bridge site from private railways operator Railtrack, through to the convincing of one-time tower-hating architect Renzo Piano to participate, more than 200 separate consultations, a public inquiry, the loss of a main lender thanks to the credit crunch and subsequent discovery of Middle Eastern partners, London’s ‘Kaleidoscope of a building’ has somehow arrived with aplomb.

“Some of these events could be classed as minor miracles,” Sellar told PERE’s annual Europe Summit last month when he gave a 30-minute talk on the trials and tribulations of developing his dream.

In his keynote, Sellar catalogued each ‘event’ as he kept referring to them, and as one digested them, it became clear how admirable it is that the 72-floor spike complete with its 11,000 glass panels spanning eight football pitches and 12,700 tonnes of steel has come to see the light of day, never mind how its clever design manages to reflect it over every other major edifice of the city.

The Shard’s previous incarnation was Southwark Towers, an office building owned by Railtrack and housing professional services firm PricewaterhouseCoopers. Leased to PwC on a 90-year lease its purchase in 1998 was a sound investment in its own right. But when, months later, the UK government issued a white paper encouraging high-density development close to transport hubs, Sellar switched his thinking from investment to development. And thanks to erroneous conveying by Railtrack, Sellar was able to negotiate the building of a tall tower in its airspace. “Call that luck or call it an event,” Sellar said.

London’s planning and regeneration authorities encouraged a building of great architecture and a press release to test public appetite. While the press was good, Sellar had to convince a world-renown architect. Piano originally told Sellar he thought tall buildings were “repressive, arrogant, impenetrable fortresses”. But by the end of a meal in Berlin, the Italian Pritzker Prize winner was convinced by visions of a shard of glass reflecting London back on itself and recreating Canaletto’s paintings of tall ships on the Thames.

Then came the 200-plus consultations with politicians and other interested parties. Then-Mayor of London Ken Livingston was a fan but that didn’t prevent the Shard being pulled into a public inquiry, “a different ball game” remarked Sellar. Undeterred however, Sellar hired a squad of representatives comprising Queen’s Council planning lawyers, architects, engineers and historians to push his plans through.

Approximately £1.4 billion (€1.76 billion; $2.17 billion) of credit was arranged by Credit Suisse thanks largely to pre-lets to hotel group Shangri-La and Transport for London for 200,000 square feet of offices in 2006. But then started the credit crunch. “They were getting very nervous and so were we,” Sellar recalled. The subsequent arrival of the Qataris was in many respects provided Sellar and The Shard with the lifeline it needed.

Today, according to Sellar, there is no pressure to lease out the remainder of the building and its surrounding London Bridge Quarter “at anytime and at anything less than the business plan we developed” – a good thing considering City rents have stayed stagnant at about £55 per square foot since September 2010, according to property services firm CBRE. Nonetheless, few observers would argue the Shard was not a success story considering its journey.

Further west along the Thames, however, a different story is unfolding. On Wednesday was announced the sale of London’s longer-standing icon Battersea Power Station to a Malaysian consortium comprising developer SP Setia, conglomerate Sime Darby and the state fund Employees’ Pension Fund of Malaysia.

Their £400 million (€1.76 billion; $2.17 billion) purchase of London’s whitest of elephants which houses those four unmistakable white chimneys is the latest of a string of attempts to revive the power of a building that hasn’t produced any since 1983. The willpower in the city for a scheme there to work is immense.

Hopefully this week’s 'event' for Battersea’s perpetually-doomed scheme means it can finally kick on to resemble something as spectacular as London's newly-crowned tallest building in Western Europe.