Schroders have announced a multi-million-pound deal with Whitehall to build and rent out a second large office block at Ruskin Square, their £500million development next to East Croydon Station.
Could this be the Home Office’s new base in Croydon, at 2 Ruskin Square?
And in doing so, they may well have pulled the rug out from under Croydon Council and any hopes they may have had of reviving Westfield’s interest in the town centre.
Ruskin Square is slowly – very slowly – taking shape after a patient approach over two decades from investors Schroders and developers Stanhope.
The “vision” for the former Croydon Gateway site is a mixed-use development comprising five office blocks and four residential blocks. Thus far, the developers have managed to deliver one residential block and a single office block.
Residents began moving into the 161 flats in Vita, the 22-storey block offering magnificent views of Platform 1 and the Bridge To Nowhere at East Croydon, in 2016.
Her Majesty’s Revenue and Customs took the keys to 1 Ruskin Square in December 2016.
Since when… nothing, nada, zilch.
Until yesterday, that is, when one of Schroder’s property funds, the Schroder UK Real Estate Fund (SREF), said that they had “secured a major pre-let with a government department on a 25-year lease at 2 Ruskin Square, a new 330,000sq ft building at SREF’s 1million sq ft mixed use development in Croydon”.
Schroder’s City types were not so crass as to discuss anything so tawdry as financial figures in their announcement, though the trade press speculated that since the HMRC building is only a little more than half the size of 2 Ruskin Square, and it was reported nearly four years ago that their rental deal was worth £200million, this latest agreement may be worth as much as 50 per cent more.
Might Home Office staff working at Lunar House soon be on the move?
And it seems possible that these new offices could be earmarked by the Government Property Agency for the use of Home Office staff, including many of those currently working in Lunar House and Apollo House of Wellesley Road.
The Home Office’s lease on those two buildings expires in 2024. According to Schroder’s press release yesterday, “Work is anticipated to start on site in the summer, subject to planning, with a practical completion target of late 2023.” Sounds a neat fit, don’t you think?
Schroders refused to identify the intended tenants when asked yesterday.
Stanhope-Schroders have been grinding their teeth with frustration over their Croydon investment, especially over the past two or three years as they have watched as the promised nearby Westfield development has stalled and then… well, disappeared in a puff of smoke.
Indeed, it was in November 2018 that a senior Schroders exec issued a warning that with uncertainty over the retail regeneration in the town centre, his company would be pulling the plug on any future building works until they had a firm commitment from a long-term tenant.
NeilMeredith of Schroders: Westfield affected Ruskin Square
“We have detailed consent for a second building and are ready to go, but I have made a decision not to go ahead until we have a tenant to take at least 50 per cent of the space,” said Neil Meredith, the head of asset management at Schroders. Meredith gave uncertainty over the Croydon Westfield as a major brake on development work on his site.
“It isn’t great when you’re trying to let an office building, but if Westfield happens it will be transformational,” he said then.
Given that Stanhope-Schroders had, from the moment HMRC moved in at 1 Ruskin Square, been buttering up Whitehall for another government department to take 2 Ruskin Square, you can imagine their reaction when they discovered that Westfield, together with Croydon Council, had also been in discussions with the Government Property Agency over providing offices on the Whitgift Centre site for the Home Office.
With business in the retail sector collapsing by the day, Westfield and their partners, Hammerson, egged on by the council, had sought to salvage something out of their plans by shifting from building a shiny new shopping centre to delivering their own, mixed-use development, including office space.
It placed Westfield, and the council, into a commercial tug-of-war with Schroders.
Yesterday’s announcement looks as if Schroders won. Certainly, they had kept the negotiations under wraps from Croydon Council. There were none of the usual bland quotes offred up from council officials to express their “delight” at the news. Indeed, the council only belatedly this morning put out their own press release that “welcomed” the news and which feebly sought to claim some faint credit for being a borough that has a railway line running through it to London.
It will be nice once it’s finished: this CGI shows how Ruskin Square is supposed to look once completed. This year marks the 15th anniversary since the site was cleared. 1 Ruskin Square, occupied by HMRC, is the grid-framed building to the left of the Bridge to Nowhere. Vita, the residential block, is to the right. Nothing else has yet been built
In Schroders’ announcement yesterday, they said, “The long-term, inflation-linked lease commitment for 2 Ruskin Square will strengthen SREF’s defensive income profile and, including the HM Revenue and Customs lease, increase the proportion of SREFs rental income from government tenants to approximately 19 per cent.”
This latest building, unlike others on the site, is not designed by Foster architects, but Allford Hall Monaghan Morris, or AHMM. It will have 10 floors and will have “… a number of key sustainability design requirements will be incorporated, including all-electric energy strategy, rainwater harvesting, high-performance façade, 35per cent green roof cover, modular structural design to minimise embodied carbon, photovoltaics and a BREEAM Excellent target.
“The design also includes an outdoor terrace space and bicycle spaces with lockers available for tenant use to promote active lifestyles and fitness, as well as three retail units located on the ground floor intended for use by convenience and local amenities to support the community-focused approach to the development as a whole.”
Nearly four years since HMRC moved into Ruskin Square, they have been promised neighbours
Jessica Berney, a Schroders fund manager, said, “Three years after we welcomed HM Revenue and Customs to Ruskin Square, we are delighted that the scheme is still ticking all the right boxes for employers and visitors, as well as those residents who have made it their home in a first-phase of apartments.”
Schroders meanwhile, are left with outline planning permission for a further two office buildings, amounting to another 500,000sq ft of office space – or the equivalent of 1 and 2 Ruskin House again.
That it has taken the developers so long to get to the halfway point in developing Ruskin Square might be viewed as troublesome, but it could be catastrophic for the rest of the site once you factor in coronavirus.
If online shopping has done for high street retailing, might working from home yet impact the commercial property market?
Employers around the world, especially in London, have been discovering that they can operate with staff based not in costly real estate, but working from home under the pandemic lockdown conditions.
The lessons of these few months in 2020 are certain to influence decision-making in coming years when, always looking to drive down costs, businesses are very likely to consider whether they really need all that expensive office space on their balance sheets.
Schroders and Stanhope have already managed to weather two financial downturns during their involvement with Ruskin Square. Coronavirus seems set to deliver the world with a third economic depression.
And then what does a developer do with half-a-million square feet of architect-designed office plans that no one much needs any longer?
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HAS CROYDON COUNCIL DROPPED A CLANGER BY SIGNING OFF A POTENTIALLY DANGEROUS BUILDING?
I note in your article that both Fosters and AHMM are the architects who have built out the first phases of Ruskin Square.
In looking at the AHMM existing residential building, located alongside East Croydon Station, I see it has small glazed windows that open outwards. This is normally OK on 3 or 4 storey buildings but to have windows opening outwards, above a railway station, in a tower building doesn’t appear to be very good thinking.
On tall buildings, the wind pressures and forces are much greater at the top and the risk is the wind catches the open window, the stays fail, and it’s ripped off the building and falls to the ground – in this case onto East Croydon station.
You might think this is a bit alarmist, but this is what happened to the other architect associated with Ruskin Square, Fosters, on his residential building in Vauxhall.
Here, about 4 years ago, the wind caught a similar window that opens out- it was ripped off it’s hinges and it tragically killed someone passing in the street below – I understand the Health and Safety Executive are still investigating this incident.
It would seem sensible not to put yourself in the position of having windows that open out in tall buildings!
Or has Croydon Council checked the detail on the Ruskin Sq residential building and confirmed they are happy with it or perhaps even indemnified it?
Obviously the full economic outcome of the Covid virus –or fall-out– is as yet unknown, but I suspect that a lot of people really do not like home-working, and are currently bored and lonely at home, missing colleagues, drinking a beer or wine or tow too mqany, and are putting on weight due to tyhe lac k of a daily walk to and from the bus or station etc.
They will therefore be very glad to get away from the isolation and discomfort working in a cold flat or house, and back to a warm office with friendly colleagues, to enjoy a laugh and a joke, a cuppa at the kitchen area or keyboard, as well as doing the work. And nipping out at lunchtime for a coffee and ciabatta. So maybe the office market demand will not be reduced too much.
As I walk from the back entrance to East Croydon through the Ruskin Square, I am impressed by the look of some of the new buildings and the landscaped walkway. I think that that the development will get completed well before the end of the decade, but as to the Whitgift centre redevelopment, the prospects are not so good. The Covid legacy will perhaps be seen a watershed moment for the redevelopment.
It is also perhaps a good thing that the design for the project has not been drawn up (well, I don’t think it has) so there is a chance of a total rethink as to the proportion of shopping, residential, and office, and the design and layout, open air/ indoor balance etc.
How many years– or decades– will it take to design and complete?