Labour is getting all spaced out over Croydon’s old offices

Proposals to preserve Croydon’s over-supply of old and unwanted office space go before Croydon Council’s cabinet meeting tonight, and risk jeopardising the town’s tentative recovery, writes WALTER CRONXITE

Criticisms of Croydon Council’s commitment to preserving heritage are misplaced.

Offices to let in CroydonA report to tonight’s council cabinet meeting looks to preserve in aspic 1 million sq ft of unused office space in the town centre.

Despite central Croydon having the equivalent of 150 football pitches in unused office floors, our council is to adopt “an office retention/protection policy”.

Nowhere does the report to council leader Tony Newman and his nine most senior councillors state where the jobs are going to come from to fill these empty offices.

Last week, the council’s “award-winning” planning chief Jo Negrini spoke of how, “We don’t have a development pipeline of office.”

Yet eccentrically, with the town wallowing in a vast excess of empty offices, the council is now seeking to preserve many of the out-dated – and largely undesirable – 1960s and 1970s office blocks, with all the negative impact that this may have on the local economy.

Micawber-like, Newman’s council seems to expect that “something will turn up”, with businesses previously disinterested in Croydon’s office stock suddenly appearing and willing to lease these ill-appointed, exhausted old buildings and fill them with thousands of busy workers.

Apparently oblivious to the contradictions in its own cabinet report, the council officers say that businesses have told them that the lack of Grade A office space in Croydon has compromised businesses’ commitment to the town and their ability to retain staff. It is perverse that keeping those very same sub-par offices is now being be put forward as a solution.

Micawber-like, Croydon Council now hopes "something will turn up"

Micawber-like, Croydon Council now hopes “something will turn up”

In future, “the Council will take a robust approach and require a detailed assessment of proposals for the loss of office accommodation”.

The presumption will be that no office will be allowed to be lost unless there is no reasonable prospect of keeping the office open. “Any loss of office accommodation will need to be justified fully against the whole planning policy landscape…” (Ah, the “planning policy landscape”), “… and demonstrate that there is no reasonable prospect of office retention, upgrade or office led redevelopment.”

This comes simultaneously with Croydon Council taking a strong position against office-to-residential conversions, many of which provide sub-standard accommodation, or “the slums of the future”, according to one of Labour’s cabinet members.

The council worries that the cheap and quick office-to-resi conversions have diverted developers, and their dosh, away from the more expensive “quality” residential tower developments. This change of policy being presented tonight, the council hopes, will force investment money into new builds – though these, too, bring their own set of problems, since they often deliver “exclusive” Yuppie flats, with high prices and “apartment apartheid”, and only very limited amounts of the misleadingly titled “affordable housing”.

The council is likely to be disappointed. Even some of the cheaper office-to-resi developers are struggling to source cost-effective funding for their projects. Meanwhile, many new-build high-rise developments are not progressing at all, with most holders of planning permission lacking the capital to progress these schemes. Those with planning consent are trying to find buyers who could finance development.

Within a stone’s throw of the council’s planning department (not that throwing stones from that glass palace is advisable), The Edridge is an example of the undelivered high-rise schemes.

The Saffron Square tower: has managed to progress through phased development

The Saffron Square tower: has managed to progress through phased development

Building a new structure requires a lot of upfront financing before the money comes in for each individual flat that is sold. It is cheaper to have a green field site, put in some infrastructure and some houses, get money in and then extend the development financed by those early receipts.

That is not usually an option for the builders of tall towers, although that is what the apparently successful Saffron Square has done – building a very large base and now a tower.

Residential adaptations of offices are cheaper, as the building infrastructure like the plumbing, electrics and especially the expensive core and lifts are there to begin with in some form or other.

Some of the office-to-resi schemes in Croydon that have got through under the Conservative-led government’s over-relaxation of planning policy are of questionable quality. However, some conversion schemes in other old commercial property have been done very well, such projects completed by Urban Splash, whose chairman and co-founder has just served on Labour’s Lyons Review on delivering new housing.

Croydon Council needs the approval of the local government minister, Eric Pickles, to pull the shutters down on “permitted development” office-to-resi conversions before the scheme is due to end. That is something Pickles has refused. So a change in policy to “preserve” Croydon’s old offices could be Newman and Co’s “cunning plan” to halt the resi conversions.

The appendix to the report to tonight’s meeting includes previously unpublished correspondence between Newman and the minister. In his letter of July 29, Newman notes the “surplus of office floorspace” in Croydon.

He wrote, “The introduction of the office to residential permitted development has significantly disturbed…” Croydon’s strategy for renewing the town centre.

“There has been a flood into the market of people buying office buildings,” Newman wrote. He cited one example where a successful office developer bought a site for £4 million, but before he could get to work to convert it into new, Grade A offices, he received an offer of £10 million from someone wanting to use the building for office-to-resi.

Such permitted development conversions, Newman wrote to Pickles, “almost universally contain very small sub-standard accommodation”. Meanwhile, “Businesses are being forced out of their accommodation and are not able to find suitable alternative premises within London.”

Read the correspondence with Pickles – and see the council’s own grid of office-to-resi conversions – here: Cabinet papers 20 Oct – correspondence with Pickles

Pickles, whose response was not received until September 12, was unmoved by Newman’s argument. Newman’s proposal, in any case, could have left Croydon Council open to huge financial claims for compensation from developers who were blind-sided by the sudden reversal of the planning policy.

Under its new drive for “office pipeline”, the council says that other than what already has been granted planning permission, the Ruskin Square site next to East Croydon Station will now be reserved solely for “high quality office”.

The revised plans for Ruskin Square are much more restrained than the original proposal for 2msqft of office space

The revised plans for Ruskin Square are much more restrained than the original proposal for 2msqft of office space

Getting “high-quality office” will be difficult for the long-suffering site owners, Stanhope and Schroders, when the council is preserving unused excess office space, thus artificially depressing rent levels elsewhere in the town. Even with the prospect of the government transplanting entire Whitehall departments to Croydon, the pre-application by Stanhope with a proposal for an office of just eight storeys is a reflection of how their high-quality approach to the development business is tentative. It’s all rather different from the initial scheme for 2 million sq ft of offices.

The old coal depot next to the railway closed down 45 years ago. In recent months the site has seen some activity get under way at long last, almost a decade since it was first cleared for development. Stanhope have adjusted their scheme once to accommodate one end of the Network Rail “Bridge to Nowhere”, and they have been prepared to trade-off one batch of land for another to make way for East Croydon’s platform expansion. It would be a great shame if Croydon Council’s office preservation policy stalled this site’s development again.

Commercial rents are much improved but they may not yet be high enough to underwrite a prestigious Stanhope development. The proposal that will go through on the nod tonight will throw a bucket-load of cold water over the office market in Croydon.

Across Dingwall Road from Ruskin Square, the Renaissance development, itself a part refurbishment of an office and part new-build, is held up as evidence that the office market is moving again in Croydon. A year since opening, it is now fully let. However, it needs to be noted that some of the tenants have come from other higher quality buildings in Croydon town centre. The Pension Protection Fund came from Knollys House and Mott MacDonald have moved out of Meridian House, and all largely because of the lower rents offered in Renaissance.

Since 2007, the Croydon economy has lost 11,000 jobs, a huge blow to prosperity. The 5,000 largely retail jobs coming with the Hammersfield development will likely be low-paid. The progress for getting government to relocate departments is, at best, a desperately slow one. MP Gavin Barwell promised in 2010 to bring thousands of civil service jobs to cheaper locations in Croydon. Nothing has been delivered so far.

Francis Maude, the Cabinet Office Minister, has spoken recently of Whitehall relocations, mentioning Croydon specifically as a potential destination. But this may yet prove to be as illusory as Boris Johnson’s thrice promised tram extension to Crystal Palace.

It is against that background of a tentative recovery of the office market that new and aggressive planning restrictions, such as that which Croydon’s Labour council will introduce tonight, could prove to be a very damaging error of judgement.

There are already many who are questioning whether the Croydon recovery narrative has been seriously over-hyped by desperate local politicians of both hues. Preserving old-fashioned and unwanted office space risks compromising the supply of new homes and new offices in the town centre which might, just might, bring in the better-paid jobs which Croydon needs.

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1 Response to Labour is getting all spaced out over Croydon’s old offices

  1. davidcallam says:

    The last time the Labour Party was in power in Croydon, a delegation of business people lobbied Mr Newman and his colleagues to change planning restrictions to allow alternative forms of development for older office stock, because it was depressing the market.
    Such is the speed of movement in Croydon politics that a decade later the same old sub-standard offices are about to be preserved again. Nobody wanted them at the height of the boom; nobody wants them as we begin a tentative recovery from the depths of a bust.
    The council would do well to have a frank talk with Stanhope, one of the most respected property developers in the country. What does the firm believe it can reasonably deliver in this and other markets in the next decade?
    Instead, I fear this council, like its immediate predecessor, will be all too ready to believe its own hype and will fall flat on its face again as a direct result.

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