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Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Examination of Witness (Questions 380 - 391)



  380. Can we stay on cycles but go to the economic one? We have heard the argument that the recent rises in applications to build tall towers reflect the fact that we have got boomtime, and then when that recedes the demand will slacken off. What are your views on that?
  (Mr Marsh) I have no doubt that the appearance of plans for very high towers reflects the economic cycle. Typically those plans come towards the end of a boom and quite often do not materialise. Back in the 1980s, for example, there was a plan to build a huge tower at what was then called Roy's Corner at Aldgate East, and it disappeared with the market. I am not saying for one moment that there is not the demand to build the high Point Towers that are currently proposed—there almost certainly is—but they are something that comes out of the economic cycle.

  381. And do you think that demand is still there post 11 September?
  (Mr Marsh) The long-term demand, because none of these could be providing space to occupy for three or four years, is undoubtedly there. The Mayor has put forward all kinds of employment forecasts, particularly for office based employment, and it does not matter which forecast you take—that implies very sustained long-term growth which implies the need for more office development land. The question then becomes to what extent are very high buildings a critical ingredient of meeting that demand? The key issue is still can the planning system and the developers deliver the buildings to look after the million square foot occupier, and we think that that capacity, by and large, does exist in the system at the moment. King's Cross can certainly provide million square foot buildings, or configurations of million square foot buildings, without going high, and as I understand it the plans that are going to be published for King's Cross do not envisage going higher. They are more Broadgate—mid-rise, in fact—buildings.


  382. You are suggesting there is no case in terms of demand for office space. What about the demand for status?
  (Mr Marsh) There is a demand, without question. All I am saying is that, if that occupier- typically characterised as an American law firm—cannot go on floor 26 or 46, they are not going to either stay at home or go to Croydon or Frankfurt. They will have to compromise.

  383. And you do not think that we should be looking at the status issue? Can you get the same status out of a groundscraper as a skyscraper?
  (Mr Marsh) Yes.

Mrs Ellman

  384. How can companies be encouraged to locate outside London?
  (Mr Marsh) It is a very difficult issue because, during the last four or five years when central London has been booming, most of the suburban centres in London have been suffering from a very significant attrition of their office stock and, by definition, locally available employment. I took an American bank to Croydon three years ago; we had done all the numbers; we had done a rational analysis of where they should locate 1000 people in terms of cost and transport and all the rest and Croydon came out top. We took them to Croydon and they did not want to get out at the station—we came straight back to the city. Image, image and image.

Mrs Dunwoody

  385. An intelligence and balanced approach as one would expect of bankers?
  (Mr Marsh) I could not possibly comment on bankers!

Mrs Ellman

  386. But what about taking them to Liverpool instead of Croydon? Would they have got out there? It is a serious question. What is this image based on?
  (Mr Marsh) Image is by definition transient and intangible. The immediate image of Croydon is visual, obviously; at night I think it looks fine, and in the day it does not; you have a large site next to East Croydon station which has been derelict for 35 years at least which, in our opinion submitted to LPAC and GLA, is the best office development site in London bar none, but the fact at the moment is that that site creates an awful image the moment you get to Croydon. The planning regime that has surrounded that site is confused; rents in Croydon are below the level needed to sustain new development; somebody needs to try and bring the whole thing together. Croydon Borough Council has tried very hard but it has not unlocked that piece of magic which these schemes need.

Sir Paul Beresford

  387. Is there a trend for some firms, international engineering companies just to pick one, to go to areas like the fringe of the M25 in association with the importance and so on and so forth?
  (Mr Marsh) Croydon, as I am sure you know, attracted companies from Victoria and so forth in the 1960s and 1970s and those companies have subsequently moved on to car-based business parks typically beyond the M25, in places like Redhill and Maidenhead and so on.

Mrs Ellman

  388. What are the competitors to London? Is it Frankfurt or Bombay?
  (Mr Marsh) Bombay.

  389. How serious is that?
  (Mr Marsh) I have a business in Bombay called India Property Research. We are there for the simple reason that we believe it is an extraordinarily competitive international city for certain types of international processing. It is well-known that British Airways moved several hundreds jobs—not people but jobs—to Bombay in 1996. That operation grew from 200 people on day one to over a thousand. We are currently involved with advising several corporations on moving jobs from the UK to India; typically those jobs are not coming from London—they are "back office jobs" which are located, for example, in the East Midlands or in South Wales. The places which have benefited from the explosion of call centres and data processing in the last five or ten years are the places which are now vulnerable to very focused places like India.


  390. Lastly, if we are going to have tall blocks, should they be mixed developments rather than just office blocks?
  (Mr Marsh) In principle I would say no. The amount of residential accommodation you can deliver in a tall block is going to be limited because it will typically be at the top. The floors are inefficient at the top. Far more residential can be developed by building specific residential bespoke buildings. What we need is mixed-use places, not necessarily mixed-use buildings.

  391. When you say they are inefficient at the top, can you explain why?
  (Mr Marsh) Basically you need more lifts in a high building than you do in a mid-rise and fat building. If you look at the City Corporation's committee report on the Swiss Re building, it gives you the net gross ratios of each floor. From memory the net gross, what you can actually use compared to the total size of the envelope, got down to below 40 per cent on the top floors and was nowhere more than I think 65 or 69 per cent. A mid-rise and fat building would typically produce a net gross ratio of 80-85 per cent.

  Chairman: Thank you very much.

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