London property developers are sacrificing height and glitz for better returns as the craze for building iconic skyscrapers comes to an end, said Ken Shuttleworth, the architect of the landmark Gherkin building.
“The age of bling is over,” said Shuttleworth, who led the team at Norman Foster’s firm that designed the seven-year- old tower in the City of London financial district. He said it would never get off the ground today. “Money now drives everything, so if you can build something for half the price, you will,” he said.
While skyscrapers with nicknames such as the Shard, the Cheesegrater and the Walkie Talkie are joining the 40-story Gherkin as part of the British capital’s skyline, those buildings reflect past rather than present considerations. All of the office towers that are due to open in London by 2014 were conceived before the financial crisis and developers are increasingly adopting cheaper, less ambitious plans.
Commercial Estates Group Ltd, a privately held developer, last month said it will review a plan to build a 63-story property adjacent to Canary Wharf. Hammerson Plc, a real estate investment trust that owns seven London office buildings, in January abandoned its design for a 32-story tower and block in the City in favour of a 15-floor office complex.
“A tall building was proving very expensive, so we went back to the drawing board,” Martin Jepson, Hammerson’s managing director for London, said.
New York Revival
Developers in New York are reviving projects to capture rising rents and office construction is set to rebound after the credit crisis curbed building. One World Trade Center, which will be the western hemisphere’s tallest tower when it opens in 2013, is one of several skyscrapers that may be built by the end of the decade, according to New York-based property broker Cassidy Turley.
In London, high-rise buildings cost 50 pounds to 150 pounds more per square foot than shorter ones because of their stronger frames and typically more irregular shapes, said Steve Watts, the partner responsible for tall structures at real-estate adviser Davis Langdon, part of Aecom Technology Corp.
That means the money needed to construct a skyscraper with 500,000 square feet (46,000 square meters) of space can be 150 million pounds, twice as much as a lower-rise structure with the same space.
Extra Rent
What’s more, many tenants won’t pay the typical 15 percent to 20 percent extra rent for being in a tower, given the economy’s weakness, said Mark Swetman, project director for Hines Interests LP. Texas-based Hines is developing the 389,000 square foot, eight-story Cannon Place project in central London.
Tall buildings are also less attractive to investors than shorter ones because tenants can’t start moving in until the construction work is over, said Mark Farmer, a partner at London-based property adviser EC Harris LLP. That’s not the case for a development divided into two or three low-rise buildings.
“You can’t occupy floors below a building site, so it takes a very long time to get the first money through the door,” he said.
The move away from office towers is a “flight from vanity to sanity,” Farmer said. “Bankers are all over the viability of high-rise like a rash and are indirectly shaping London’s skyline, not architects,” he said.
Cheaper Techniques
In the meantime, Stuart Lipton of Chelsfield Partners LLP is trying to find cheaper ways of putting up skyscrapers. Lipton, who built most of Broadgate in London between 1984 and 1991, plans to import techniques from the U.S. to make tall buildings more profitable. Last year, Lipton, 68, asked Watts at Aecom to design a prototype 40-story tower costing close to 125 pounds per square foot to erect, about half of the average cost. Watts said he cut the cost to between 135 and 150 pounds by “keeping everything as simple and repetitive as possible.”
“This is a new opportunity rather than the death of high rise,” Lipton said. “The latest towers are wibbly-wobbly fancies of the sky, but with a more disciplined approach to architecture and standardised components, you can get elegant and efficient designs for much less money.”
