Examination of Witness (Questions 380
TUESDAY 5 FEBRUARY 2002
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 proposedthere almost certainly
isbut they are something that comes out of the economic
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 takethat 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 Broadgatemid-rise,
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 firmcannot 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.
384. How can companies be encouraged to locate
(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 stationwe
came straight back to the city. Image, image and image.
385. An intelligence and balanced approach as
one would expect of bankers?
(Mr Marsh) I could not possibly comment on bankers!
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.
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 jobsnot people
but jobsto 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 Londonthey
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.