Pioneer works for greener space
Copyright: David Lawson - first published Business magazine Feb 1991
Abstract paintings crowd every wall of Stuart Lipton's office, adding splashes of colour to the severe futuristic furnishings. Tomes on obscure Japanese architects jostle with local history in a corner bookcase. Delicate sculptures and artifacts crowd elegant side tables. This is not the way your stereotypical developer is supposed to live - but Stuart Lipton is no ordinary property tycoon.
A large but surprisingly gently-spoken man, he has rejected old ideas of the egg-box office block. Everyone should be able to work in similar surroundings, he says. And occupiers will pay for the extra quality of life, even at a time of financial stringency.
Lipton is one of the industry's foremost thinkers, forever pushing back the boundaries of taste and technology. But he is no mere theorist. During the property boom he did as much as anyone to shape the modern face of London, notching up a remarkable string of firsts - and making a large fortune in the process. Broadgate, for instance, rewrote a rulebook which said City tenants would never leave their comfortable enclave around the Bank of England. Stockley Park, near Heathrow, proved that major companies woulkd move even further out of town if given the right buildings. Both were the result of long periods of research and thought about the real needs of tenants rather than property investors, and led to a sea change in subsequent developments.
Nowadays, he is thinking about how to work through the recession. There is demand for new offices, he insists - "not extra space but better space." When times get hard, companies look for more efficient buildings at lower rents, he says. And as staff become difficult to attract, employers demand a better environment as a magnet. In future, there will be fewer young and talented workers to feed London's financial factories. They will also be much "greener", demanding safe and efficient surroundings in which to work.
Controversial proposals for a £3 billion redevelopment behind King's Cross station spring from this philosophy. Demand for a new community of 30,000 workers is already apparent, says Lipton. Dismissing the widespread view that London is already over-endowed with space to house these people, he insists that businesses are eager to save money by consolidating from separate addresses into the sort of corporate centres he wants to build on the semi-derelcit land behind the station "They want places," he says, giving a world of extra meaning to such a mundane term.
"Do you know that research we had done by London University showed that people walked faster between the buildings in Broadgate?" This extra spring in the step came from the sense of "place" - complete environments created as part of a corporate culture. Workers are more comfortable but also more excited. They rush to get where they are going.
Whether companies will rush to Lipton's new schemes remains to be seen, but he claims a long list of names eager to take 100,000 sq ft-plus office "places". "They may not want to move tomorrow but it is in their minds," he says. Lipton's company, Stanhope, spends £1 million a year ferreting such details to provide a "true" market picture contrasting with the pessimism of some observers. It also feeds into the long period of planning the type of buildings required.
This care led to the success of Broadgate, a joint development with Godfrey Bradman's Rosehaugh. The partnership is beginning to look frayed as Rosehaugh struggles with massive debts, and the prospects that it will remain intact to work on King's Cross look weaker by the month. In the meantime, however, the old magic between the two has produced another first, the largest property deal ever seen in the UK. Cooper's Deloitte has taken more than 500,000 sq ft of Rosehaugh-Stanhope's £450 million Ludgate Place development near St Paul's Cathedral at a rent understood to be around £50 a sq ft.
This seems to vindicate Lipton's research findings that groups are still looking to consolidate into new buildings. Cooper & Lybrand had already pre-leased the 350,000 sq ft Embankment Place over Charing Cross station. The accountancy firm then merged with Deloitte and realising it needed an even bigger home. It says much for Bradman's market savvy and contacts that he lured in the merged group. The only doubts are what sort of guarantee was given to take over the rent payments on Embankment Place. For all Lipton's optimism of underlying demand, developers are being forced into making this sort of deal to attract tenants.
They are also building less. Stanhope will produce less than 1 million sq ft a year during 1991 and 92. Meanwhile, Lipton is occupying his time looking for joint ventures. "We aim to build for specific occupiers," he says. "That is another way they can save money because they get exactly what they want."
This seems like a retreat from the "shell-and-core" building methods Lipton helped import from the US, where office blocks are handed over at the bare concrete stage so occupiers can then fit out to their own needs. But the drive towards user-friendly space is not so clear-cut. The shells provided at Broadgate vary enormously, because Rosehaugh-Stanhope's research discovered that each financial tenant would require different types of dealing floor.
"We find out what a tenant wants - and then go back afterwards to find out if we have done anything wrong," says Lipton. He admits to continuously learning from mistakes. Perhaps his biggest was building "rent-slabs" - the classic tower blcok of the Sicties and Seventies - before he discovered the secret of creating "places" which mix commercial sense with high-quality landscaping and technology. But he shares that fault with a whole generation of developers. Ambitious plans for housing, shopping and industry in the Royal Docks might be classed as another mistake. These collapsed under the weight of the recession and the development corporation's bureaucracy, costing Rosehaugh-Stanhope almost £10 million in wasted work. But Lipton has learned enough to consider returning - providing he is allowed to do things his way.
Meanwhile, there is the small matter of some 2.5 million sq ft planned on the Isle of Dogs under the watchful eye of leading architect Richard Rodgers. This is also evolving as experience and research throws up new information about what tenants want. Tower blocks have been junked in favour of a business park approach. The ultimate aim is to reproduce Stockley Park in the wastes of docklands.
The books and paintings in Lipton's office are no affectation but an expression of his passion for the merging of design and culture. He commissions the best architects and scatters modern sculpture among the fast-striding workers at Broadgate. But the price has to be right. He was the first to import US fast-track construction methods to cut costs, and strives to consistently cut margins. "We are building for the same amount today as we were two years ago," he says.
That will be a powerful influence on tenants spoilt for choice in the flood of new space coming out of the ground over the next couple of years. Lipton is banking on the fact that he can ignore many of those buildings because they will provide no competition. "Just because a load of turkeys are are coming on the market, it doesn't mean anyone will buy them," he says. They cannot offer the havens of peace and clear corporate identity that tenants will increasingly demand, he says.
This is the bedrock on which a massive scheme like King's Cross rests. On the face of it, there appears little justification for another 6 million sq ft of offices in London, particularly when over-stretched funders are scared to cough up even more money. Lipton is confident, however, that this "super-place", masterminded by top architect Sir Norman Foster, will draw companies out of the crowded areas of central London. "It will be cheaper - and a better place to work," he says.