As e-businesses flock in, a clutch of schemes are confirming Clerkenwell as London’s most fashionable location. In the third of our series on the city’s areas of opportunity, Elaine Knutt talks to the creators of the new Soho
Clerkenwell agent Andrew Bridges believes in the “taxi driver” school of research. Whenever he hails a black cab back to Stirling Ackroyd’s offices, he asks the taxi driver to take him to “the new Soho”. In the past six months, he says, the cabbies have infallibly responded with “You mean Clerkenwell, mate?”
A wedge-shaped slice on the map descending from Islington between Midtown and the City, Clerkenwell’s image was dominated by Smithfields meat market and printworks right up to the 1980s (see panel), and has been far from fashionable. Then, thanks to office conversions to residential, the loft-dwellers started moving in and the area was on its way.
Now all agents would agree that, in the past year, Clerkenwell has turned the corner from up-and-coming to truly arrived. It’s not only advertising and media overspill from Soho but also PR, legal, internet and telecom companies moving in to join the style-conscious loft buyers who colonised the area six or seven years ago.
Chic image depends on economic growth
However, though Clerkenwell seems to have defined itself as the cheap yet chic alternative, its new image is subject to the vagaries of the economy. As a second-choice location for many occupiers, it could be the first area vacated in a recession.
“A lot of demand is driven purely by media and internet companies. If those sectors shut down and staggered away, EC1 would fall off quite considerably,” predicts Kevin Chapman of Nelson Bakewell.
But for the moment at least, the polo necks and dot-commers are conducting more searches than anyone else, pushing up rents to nearly £322 per m2 (£30 per sq ft) and encouraging developers to take the plunge into speculative development. In the past 24 months, rents for quality space have risen sharply from the £107-£161m2 (£10-£15 per sq ft) mark. Once completed, a scheme such as Bee Bee Developments’ proposed conversion of 1 St John’s Lane is expected to fetch a record £322-£376m2 (£30-£35 per sq ft).
Then there’s 10 Lindsey Street, one of the office units carved out of the first floor of Smithfield Market. When Weatherall Green & Smith quietly marketed a 929m2 (10,000 sq ft) space on a three-year lease, it was surprised to receive seven bids within two weeks.
Another example of buoyant demand is The Observatory, a 1980s-vintage office scheme handled by Farebrother. Three years ago Weatherall Green & Smith offered £86 per m2 (£8 per sq ft) on behalf of its client, but the building was taken off the market to be refurbished by owner London & Regional Property Fund No 4. Six weeks ago, WG&S offered £301 per m2 (£28 per sq ft) for space it describes as not of the best quality, although the deal later fell through.
Internet companies are behind every second enquiry – and their requirements grow as fast as the companies themselves. Nelson Bakewell recently acquired 2,323m2 (25,000 sq ft) for TheStreet.com at Cardinal Tower; six months before, the company was looking for 929m2 (10,000 sq ft). “Internet companies struggle with the covenants, but they’re chock full of cash and don’t mind paying high rents,” comments Bridges.
New developers lured in
Demand is attracting new names into the area. Clerkenwell specialists such as Bee Bee Developments, which prefers quiet, “off-market” deals, are now competing with West End operators such as Derwent Valley, which has two schemes in the area. Derwent director Simon Silver would be delighted to find more. “This year we’ve seen a dramatic rise in rents. We were getting £12.50-£15 at the beginning of the year. Our highest is £23, and the agents say it’s now worth £25.”
The Clerkenwell boom has also encouraged one agent to turn developer. CYZ, established by Hurford Salvi Carr partner Tim Carr, is completing a residential conversion of a former printworks at 28 St John’s Lane. All the apartments have been sold off-plan, leaving only two p44 penthouses of 185m2 and 204m2 (2,000 and 2,200 sq ft), priced at £1.1m and £1.2m respectively, to be marketed at the end of January.
Meanwhile, the loft-conversion specialists that made it all possible are being priced out of the market as the rental yield on commercial schemes achieves parity with residential sales. And residential conversions appear to have fallen out of favour with Islington council. Planning policy team leader Bob Hawkes says: “It’s getting to a point where demand for employment and office space is picking up. Obviously, we want a balance between the two.”
Most current residential developments are presold but their replacements are not coming forward because of competition for sites. “Most of what Clerkenwell had to offer has been offered, sold and finished,” comments Hurford Salvi Carr’s Stephen Hurford, who reports only a handful of properties still for sale in uncompleted developments from St George, Bellway and Berkeley Homes.
Lofts and loft apartments that do come on to the market can achieve £4,305 per m2 (£400 per sq ft), up from £2,960 per m2 (£275 per sq ft) 18 months ago, according to Jonathan Vandermolen of Blenheim Bishop.
That rarity, a landmark development, is due to start in the new year on the Allied-Lyons site on St John Street, thanks to Thai-backed Media Office. According to Daniel Watney’s Simon Crotty, the commercial upturn has been the making of the 46,450m2 (500,000 sq ft) scheme (see p46). “The planning allowed a maximum of 50% residential, and two years ago retail and commercial companies were hesitant. Once developed, it will transform Clerkenwell’s northern side.”
Institutions hesitate
So far, institutions and funds have been slow to enter Clerkenwell. “I showed a West End fund manager around the other week,” reports Bridges. “But he just didn’t get it at all.” However, it is starting to dawn on a few of his colleagues, with Threadneedle and Henderson the first to take the plunge. “When funds are prepared to put money in speculatively, it’s a pretty good sign,” comments NB’s Chapman.
With Clerkenwell established as a true live/work area, agents predict that the next phase will be live/work/shop. No doubt to the dismay of true loft-dwellers, Crotty reports interest from supermarket chains in a 1,207m2 (13,000 sq ft) ground-floor unit beneath the redeveloped HQ of the Order of St John. Agent Ian Lerner is letting shops on Cowcross Street; and Media Office is targeting non-chain specialist retailers for St John Street, and for the next phase of a loft scheme.
Clerkenwell agents realise that they could be experiencing another peak in the area’s up-and-down cycle, but still argue that its current popularity is sustainable. “Last time around, Clerkenwell was a safety valve for the City and Midtown,” recalls Christopher Williams-Ellis, a partner at Weatherall Green & Smith. “But this time there are indigenous occupiers in a boom sector.” And perhaps the best guide to the area’s prospects can be found in the share prices of the internet companies – and with taxi drivers.
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Clerkenwell: developments in progress |
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Office and residential values have doubled in the past year, encouraging speculative development in Clerkenwell’s most sought-after streets |
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1 Exchange Place 1-4 St John’s Lane Developer: Cloverbrook/Bee Bee Developments Size: 8,545m2 |
2 19-20 Great Sutton Street Developer: Real Loft Co Size: 232m2 |
3 58 Britton Street* Developer: Waverley Square Estates Size: 557m2 |
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4 Weddel House 13-24 West Smithfield Developer: London & Henley Size: 9,290m2 |
5 28-29 St John’s Lane Developer: CYZ Size: not known |
6 Allied-Lyons site 148-180 St John’s Street Developer: Media Office Size: up to 92,900m2 |
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7 Fleet House 57-61 Clerkenwell Road Developer: Samuel Lewis Housing Trust Size: 5,946m2 |
8 Crystal Court 12-17 St John’s Square Developer: Bee Bee Developments Size: 3,344m2 |
9 65 Clerkenwell Road Developer: London & Manchester Size: 1,394m2 |
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10 Grayson House 9-10 Great Sutton Street Developer: Bee Bee Developments Size: 557m2 |
11 Priory Fields House 120 Aldersgate Street Developer: Bee Bee Developments Size: 3,716m2 |
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*Completed Office Residential |
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Clerkenwell’s history From cloth caps to Fabric The new arrivals are pouring into an area that was traditionally the City’s backyard. Narrow streets of Georgian and Victorian terraces accommodated the service industries of those eras: printing, tool making, warehousing and distilleries. The hardware stores, clock repairers and greasy spoon cafés still in business today are remnants of that grittier tradition. Now they sit side-by-side with a sandwich bar called Feast*, restaurants that attract a City lunch clientele, the Evening Standard Bar of the Year, and new superclub Fabric. And in the southern part of the area, pubs such as The Hope serve Bart’s Hospital staff and Smithfield meat market workers in the early hours, then host corporate champagne brunches a few hours later. This mixed culture followed Clerkenwell’s loft boom, which in turn had its roots in a previous wave of development. In the frenzy of the 1980s, Clerkenwell became a fringe hot spot, where office conversions achieved the giddy heights of £430-£462 per m2 (£40-£43 per sq ft). When the bottom fell out of that market, many sites earmarked for commercial development were approved for change of use to residential. Agent Ian Lerner, who has worked in the area since the late 1960s and helped to sell such buildings, believes that historical accident has helped Clerkenwell to reinvent itself. He comments: “It was one of the few areas of London that didn’t have wholesale redevelopment after the war, and most buildings were still in single ownership.” |
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Alfred Buller Enigmatic Irishman aims to ride the boom Explore the northern part of Clerkenwell, and your eyes will be assaulted by orange and black posters urgently posing the question “Indulge or Invest?” The posters are the enigmatic calling card of Alfred Buller, the man behind office and loft specialist Bee Bee Developments. Specifically, they are a teaser for Bee Bee’s pilot scheme in Aldersgate Street to sell “commercial flats” as office space for start-up companies. But as any local agent will tell you, the posters’ quizzical style is also typical of how the 42-year-old likes to present himself. “Did you get any sense out of him?” asked one. “I always find he talks in riddles.” Buller certainly volunteers few hard facts in his staccato-style descriptions of Bee Bee’s activities. But the story that gradually emerges is that Buller and his cousin Craig Best, who handles the financial side of the business, teamed up in the early 1990s to take advantage of the property crash to snap up loft-conversion opportunities. It was Buller’s second time around in Clerkenwell. Through the 1980s he ran speculative office developer Smithfield Developments, selling out in 1988. “A lot of people would say we were lucky when we got out at Smithfields,” he says. In fact, what other people say is that Buller cut it closer than he acknowledges. This time round, Buller prides himself on market research and trendspotting. The idea of “commercial flats”, for instance, was born after Bee Bee noticed that companies with 372-465m2 (4,000-5,000 sq ft) requirements preferred single-floor occupation. He expects that buyers will be company founders using the flats as pension investments, or overseas investors. His ability to spot demand from media, design and advertising companies also gave him the confidence to develop commercial property in Clerkenwell, where he has half a dozen schemes. The posters adorn the 3.2ha (8 acre) Clerkenwell Estate, bought five years ago for £7.5m. “When we believe in an area, we’ll focus on it strongly,” he says. He now believes that tenant demand will hold steady for the next 12-24 months. “Demand has never been stronger. You’ve got to get out and start building.” Funding for the building spree comes from “high net worth” people who form joint ventures with Bee Bee on specific schemes, rather than from banks and institutions, which are “not yet putting their hands up to do speculative offices”. Buller is anxious to keep his private life and sporting success separate from his business and avoid the impression that he isn’t “focused on property”. In fact, he is an Olympic-standard rider and stud farmer who also holds charity fundraisers at his home in Scarva, County Down. “I could have a lot of distractions if I wanted them, but it’s a good time to be in London property,” he says. |
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Mark Wadwha Visions of a new SoHo Mark Wadwha has a personal stake in Clerkenwell’s development. He’s moving his office there, he sponsors local galleries and his company owns the LED bar. “Part of developing in an area is investing in it, and creating its image,” he says, drinking latte in the trendy Benugo coffee bar to underline his point. This image, for Wadwha, is based on New York’s SoHo or Los Angeles’ Culver City: districts with a defined architectural identity and 24-hour activity, where talented twenty-somethings naturally gravitate and start-up internet and media companies can expand on a diet of endless cappuccinos. After cutting his teeth in New York’s SoHo and seven years in London lofts and offices, Wadwha and his Media Office company is planning a major Clerkenwell development that he hopes defines that vibe. As he describes it, the £60m St John Street scheme will be the base from which creative executives build their websites and media empires, eat lunch at Yo! Sushi and then shop at the London branch of New York deli Dean & Deluca. As he happily drops the names of tenants behind the enquiries he has received so far, Wadwha says that the 46,450m2 (500,000 sq ft) scheme will offer companies such as Sony PlayStation and website designer Razorfish “an environment that suits their culture and space that inspires them”. That environment will be courtesy of the sinuous forms and bold colours of architectural firm Future Systems, designer of the NatWest Media Centre at Lord’s, named the building of the year by the RIBA. The 37-year-old Royal College of Art graduate is delighted to be commissioning such statement architecture. He points excitedly to a model of a phallus-shaped tower, saying: “That’s what I want. Or perhaps just the top half”, quickly curtailing his ambition to suit planning guidelines. Media Office acquired the site in October with finance from quoted Thai property company Kian Gwan Land, which has backed him for the past five years. The site’s previous owner had planning permission for two alternative schemes, one with a 50/50 mix of residential and commercial, but evidently did not have the momentum to get the project off the ground. Several other developers looked at the site, but Wadwha says that he was the only one to bring a track record in unconventional offices in fringe locations after developing the “Black Cat” Greater London House in Camden. “No one else has let on that scale in the fringes. All the big companies are scared and want prelets,” he says. Mixed-use scheme planned For his St John Street development, Wadwha is proposing a mixed-use office and retail scheme with a small residential element, for which Berkeley Homes’ name is mentioned. The offices will be wired with fibre-optics, and will include a “tele-house” to allow web-based companies direct access to servers, and a 1,858m2 (20,000 sq ft) media centre that tenants can rent for presentations. Agent for the scheme is Stirling Ackroyd. Wadwha hopes to be on site early next year, and have tenants moving into the 13,935m2 (150,000 sq ft) first phases 12 months later. In the meantime, he is “looking at two or three other buildings” on St John Street, and is hoping to acquire further buildings near his main site. And, presumably, he wouldn’t be averse to a few more caf |
