High up on one of the walls of the Battersea Power Station, beneath its towering white chimneys, you can still see a scribbling on the red brick of the iconic building which used to supply London with electricity. It reads: “Captain James T Walker of the Starship Battersea”.
The faded landmark’s redevelopers are hoping the station’s swish new tenant, Apple, hangs on to the quirky graffiti when the rough-and-ready site is transformed.
The tech giant’s new London headquarters is at the heart of a revamp, due to complete in December 2020, which will see the building house a cinema, a food court and 100 shops across two distinct shopping centres. It is one of a string of huge central London projects vying for the capital’s wealthy shoppers and office tenants amid a squeeze on consumer spending and a Brexit-hit commercial property market.
Gazing round the industrious building site on a sunny afternoon, it’s easy to see the vision, despite the fact there’s no roof and burly builders are stomping through puddles. With its old marble tiles and existing large internal windows, which will soon be store fronts, a shopping centre appears a natural fit. The wider site is already host to hundreds of plain-looking flats and a riverbus service and will eventually boast 4000 new homes, of which a small percentage are “affordable”. There’ll be a glass elevator viewing platform for tourists and a new tube station.
The project, overseen by the Battersea Power Station Development Company, represents a promising next chapter for a site known around the world but a perennial headache for its succession of owners: plans for a theme park, eco-dome and rival housing and retail complex have been floated and ditched. It’s been empty for three decades and has changed hands several times until 2012 when the site landed its Malaysian owners, Sime Darby, SP Setia and the Employees’ Provident Fund. In January, Permodalan Nasional Berhad, a fund manager with £50 billion of assets under management, said it would buy a stake in the building from Sime Darby and SP Setia, which between them own 80% of the site. Almost twelve months later, the deal has yet to be finalised.
The iPhone maker’s offices, which will see 1400 staff occupy six floors, will be one of its largest outside the US, a big coup for Battersea when it landed the gig in 2016 after a year of courting.
A string of tech players have come knocking since, insiders claim, enquiring about the offices that will become available during the later stages of the £9 billion regeneration around the “Cathedral of Power”, which will also host No18, a Swedish members’ club, part of serviced offices provider IWG.
But there have been some jitters of late. Apple is reportedly eyeing some temporary office space in case there are delays to the project’s completion, and several Malaysian entities have faced troubles at home with a string of deals in which Malaysian sovereign wealth and pension funds had invested being probed over money-laundering concerns. BPSDC said, however, that this isn’t something which Battersea’s owners have been or are currently subject to. In June, a senior Malaysian politician said the PNB deal should be investigated.
During the visit, Simon Murphy, BPSDC’s chief executive, says the shareholders are committed to the project.
THE former power station is not the only huge project reshaping London with the help of Silicon Valley. Over in King’s Cross, which has almost completed its £3 billion revamp, Google is building a £1 billion HQ and Samsung will open a giant showroom to rival Apple’s in Regent Street. In summer, Facebook said it will open a large new office there, turning the area into one of London’s leading tech clusters. Andrew Barnes from JLL, the property adviser, argues: “Battersea won’t have quite the same draw, nor the multitude of tenants. Battersea has one main tenant. It doesn’t have a critical mass.”
And while east London remains a key hub for tech firms bidding to become the next Facebook, larger developers are beginning to discern that workers are after Shoreditch-style eclecticism around more central locations.
Adam Walford, a property lawyer at Howard Kennedy, says: “Apple, Google, they’re keen to be somewhere where their staff come to a really nice village within a town.”
Moreover, the presence of blue-chip tech firms and the cash they pay in rent in these areas can often serve as an informal guarantee in conversations developers have with the banks. A long-term lease from a tech giant adds credibility to the project and an assurance of large chunks of rent.
This tactic has allowed Battersea and King’s Cross’s backers to gamble on smaller, more trendy but less proven brands to make their project look different.
As such, household names like Paul Smith or Cos are joined in King’s Cross’s Coal Drops Yard by a string of fledgling brands. The new shopping street boasts more than 50 stores including Bonds, a fledgling so-called lifestyle brand, where you can grab a coffee or make candles in store.
A property source, who has clients at Coal Drops Yard, says: “King’s Cross is taking a bit of a flyer with that. There are companies in there that have been around for a year and can’t demonstrate financial sustainability. The rationale is, we have the right environment to make it work.” He added that rents are still sky high even for the smaller brands.
There’s a similar strategy at Battersea. Sam Cotton, head of retail leasing, says: “We’re avoiding the very old, formulaic way of setting out a retail destination.”
You won’t see the big beauty floor à la Selfridges or House of Fraser, where a clutch of cosmetics brands sit together. It will lease independent spaces that vary in size and rent for them. Nor will you be able to shop in the likes of Topshop or New Look. There will be a separate High Street outside for those.
If both projects can thrive, there’s hope in the world of beleaguered shopping centres retail that a blueprint could be created.
Let battle commence.
AREAS TO WATCH
Paddington to White City
Known as the knowledge quarter, this area is attracting pharma firms keen to be closer to tech giants — Microsoft’s London HQ is in Paddington Basin. Swiss drugs giant Novartis said it will move its HQ to White City, joining fellow life sciences companies Autolus and Synthace.
Camden
Tech tycoon Teddy Sagi’s property investment firm Labtech will plough in millions of pounds to open a new development in Camden Town, with 150 stores and 60 restaurants, plus offices and flats. LabTech says: “It has the advantage of having excellent transport connections.”