Delivering affordability: resi vs workspace

Friday 25 January 2019

How can London create the type and quantity of both the affordable workspace and residential that it needs?

A Think Tank organised by NLA and held in Hackney’s Old Baths Café – itself a model of affordable workspace and community uses provision – sought to find out.

Paul Brickell, Executive Director of Regeneration at the London Legacy Development Corporation, said it was crucial for existing businesses to thrive in the Hackney Wick and Fish Island area as well as providing new workspace for businesses spinning out of the universities and cultural organisations that are coming to the area. But are we asking too much of developers, asked the chair? 

‘I don’t think so’, said deputy mayor Jules Pipe. ‘I don’t think it’s resi versus workspace, although obviously we have a housing crisis in the capital and the Mayor rightly talks about trying to solve it’. But any reading of the draft London Plan, he went on, shows that the intention is as much focused on industrial land and workspace as it is on residential, and it seeks to promote the idea of a polycentric city wherein all of the centres co-exist. ‘The plan is very much against a residential-only outer London, all waiting for Crossrail 3, 4, 5 and 6 to ferry people into the Central Activities Zone.’ Pipe said he was expecting to see mixed-use projects with workspace as ‘ground floor plus’, with residential.

Pitman Tozer director Tim Pitman pointed to one such project his practice has just completed for Peabody at Monier Road, which is 71 homes plus a ground floor use taken by The Trampery. ‘We are just very aware that is much more expensive architecturally to provide that ground floor and obviously it goes into the viability’, he said.

And yet, said Jack Fortescue, head of projects, ACME Studios, his practice has created 84,000 sq ft of ground floor space. ‘It is just not more expensive to create ground floor affordable workspace’, he said. ‘I don’t buy that argument.’ Concrete slabs, breeze block walls and surface-mounted plastic fittings are not expensive, he added. Marcel Baettig, chief executive of Bow Arts agreed, saying that basic schemes could be delivered for £10-35 per sq ft, but that could be tripled once into any sort of funding round. 

Jackson Coles partner John Boxall said some schemes could be fitted out for even less than that, which takes it into a wider area of procurement and ‘how you actually buy stuff’. Get it through a construction contract or commercial developer’s hands and high costs will inevitably result. If you can get hold of a space on a long lease then that is a different matter, Boxall said. ‘I’m always struck by that disparity…there are smarter ways of doing it.’

The ground plane of a building, after all, is the opportunity to make or break a space, said Hadley’s director of regeneration Steve Kennard, requiring a flexible approach in appraisal. It is also about the success of the locality, added Pipe. ‘Making it a place is absolutely key’, he said, ‘especially when so much of an area is being rebuilt’.  

William Chamberlain, Founder and Director, Creative Wick, said Fish Island Village was a good example, bringing in a new definition – ‘low cost workspace’ rather than affordable, which is certainly new for Hackney Wick. But keeping it as shell and core was a way of building in ‘churn’, he said. 

In Old Kent Road similar issues abound in terms of keeping less glamorous uses too, said Colin Wilson, head of Old Kent Road, LB Southwark. ‘But one of the things we’re trying to do is have an effect on land value by having a plan that shows what kind of value we should get from the land and what kind of uses we could have in developments’, he said. And rather than have land use, it would suggest building type as a ‘prescriptive’ plan. ‘If you don’t keep control of that then speculation happens’, and naturally optimistic developers waste everybody’s time arguing about what development might be. Thus the approach is to deal with this ‘upstream’, said Wilson, pointing in particular to one former horse hospital and stables building the authority wants to see kept in commercial use despite the owner retiring. ‘He’ll still get money, but it won’t be a crazy speculation situation’. Suzanne Johnson, head of economic regeneration, LB Hackney agreed that being ‘specific and clear’ with partners, developers and businesses was a key, very exciting and worthwhile enterprise, putting ‘realistic expectations’ into plans. 

Eric Reynolds, founding director of Urban Space Management said that local authorities do not value time, however, taking them much too long to make up their minds. But there was a big opportunity in Hackney to develop at least a dozen spaces for very little money at single storey-buildings locally. ‘However, the underlying problem is the land value, and we need to control that, possibly through planning.’ Most local authorities have assets but are doing ‘completely the wrong thing in selling them’. But time is of the essence: ‘Local authorities should get some short-term thinking in and get going’.

Professor in urban design at the Bartlett Peter Bishop said that planning could be ‘really quite powerful’ if used creatively, allowing trade-offs and brokerage. ‘If you have a basic planning framework which you hold long enough so the land values set – if you can’t hold it long enough that’s when land values fluctuate’. Hold the expectation and be consistent in control, work out what you want to do, and you can negotiate an awful lot through planning’, Bishop went on. Communities, too, could be given more opportunities to curate spaces, suggested Lucy Owen, interim executive director of development, enterprise and environment, GLA. But Alice Fung, co-founder and director, Architecture00 and Mayor’s design advocate pointed to research that showed that longer-term vehicles are needed, with a proposition that special purpose vehicles could be used to align interests and hold assets, with Lambeth trying to do something along these lines at Loughborough Junction. ‘We have taken a very silo-ed mentality to development – resi or commercial and forget anything that isn’t retail as well. We’ve lost muscle memory for anything other than the Tesco beneath resi.’

Lendlease communications director Matt Bell said they were about to go out to consultation on the masterplan for Euston, exploring how the offer could be different from King's Cross, in particular, and how the workspace piece fits into this equation. ‘Stop consulting and get on with it’, was Reynolds advice, claiming that small businesses were ‘bored to tears of being asked’. 

One of Hackney’s most renowned creative industries, iconic furniture manufacturer Isokon Plus, is being ‘displaced’ to Walthamstow, said Chamberlain, and it was because of delays in the planning process that things like this happen. The meanwhile approach is great, added Kirsten Dunne, senior strategy officer, culture and creative industries at the GLA, but only when there’s a long-term approach in the background that has a decant supply chain and puts people back into another space on another development. Indeed, said Fung, the meanwhile project has been stretched to just doing ‘community stuff’, so perhaps it should be seen as an opportunity to test projects and inform longer term development. ‘Just like moving home, there is a massive cost to setting up an operation’. 

What all of this reveals, though, said Yolande Barnes of the Bartlett Real Estate Institute, is that there is a growing realisation that human beings don’t exist in vacuums; they do all sorts of activities in neighbourhoods and use buildings for all sorts of things. But there is a problem with land value – so that certain uses, if we go for single-use planning, will drive out others, just as open market workspace or housing will tend to drive out affordable. ‘I’d like to suggest the adoption of a turnover basis to rents’ said Barnes, ‘in both resi and commercial, so that land values stop being driven by hope value for the highest use and start to be based on what a piece of land will yield’. Planning would then have to acknowledge the unpredictable. ‘We just have to build in flexibility and good streets that people want to live, work, play, make and stay in’, she said. Without thinking of financial business models and incentivising single-storey landowners to build up, relatively little is going to happen, said Barnes. 

Azzees Minott, economy research support officer, London Assembly said that delays on schemes often arise where local groups feel that they have not been adequately consulted. But the definition of what exactly affordable workspace is also interesting, said Boxall; if rents had been defined at the Tea Building as being market rent less 20% that would have been fine at the beginning, but now local rents could be over £50/ft2, for example. ‘You’ve got to be careful how you define it’, said Boxall, ‘and think about change’. When you develop, the community changes, but you must consider the new community as much as the old, he added. Some workspace should be designated as D1 – education and training – said Fung, and perhaps one of the planning tools should be to think about use class that helps cap hope value and market rent.

Ultimately, said Rosanna Lawes, executive director of development, London Legacy Development Corporation, we are in an interesting time, with a lot of disruption in the market that creates opportunity. Our high streets are declining and failing because the market has delivered; we are still living in that age, but there is an opportunity. ‘There is no reason why we couldn’t be creative and work with the muscles and the minds in the conservative approach to how we deliver. There’s opportunity and synergy; we need to be creative to realise them’. It is also about curating space and place, added Pipe, even if a problem he foresees is an erosion of control via a further round of Permitted Development rights, allied to a lack of resources in the boroughs themselves. ‘I haven’t met a developer yet who wouldn’t happily spend more in fees if they got the service they wanted’, said Pipe. ‘It would actually aid the curation of place if there were more resources for that.’ 

By David Taylor, Editor, New London Quarterly 

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London is a global powerhouse of commerce – with particular strengths in finance, tech, media and the service industry – yet this status is being threatened by growing pressures on land, market uncertainty following the EU referendum vote, and rising business rates.