The capital\u2019s transport body is seeking further joint ventures with commercial developers as it aims to secure long term income<\/p>\n
Transport for London (TfL) has announced an intensification of its strategy of teaming up with property developers to generate greater income from the land it owns in the capital. A process will be launched early next month to appoint a small group of private sector partners with the aim of, as TfL puts it, \u201cmaximising the long-term development value\u201d of its estate – having more and better stuff on it to make more money for TfL, in plainer terms.<\/p>\n
Some people think TfL should not get mixed up with this kind of thing, any more than it should be funding cable cars and garden bridges. Fair enough. TfL might ask in response if it would be clever to not bother bringing in an anticipated \u00a31.1bn this way over the next ten years. Good question.<\/p>\n
The transport body owns 5,700 acres of Greater London altogether, making it one of the biggest landowners in the capital. Much of this valuable space is occupied by railway tracks, stations and roads, but the portfolio also includes offices, shops, apartments, car parks and spare land attached to them. Up to 50 of these hundreds of developable sites will be allocated to the chosen developer partners, who will be selected by November and number between three and six.<\/p>\n
The long-awaited enhancement of South Kensington tube station could at last get underway as a result. TfL\u2019s director of commercial development Graeme Craig lists a few more locations ripe for an upgrade: \u201cHarrow-on-the-Hill, Northwood, Kidbrooke, two by Oxford Circus at the end of Argyll Street, London Road sidings, Parsons Green [former] depot…we are awash with fantastic sites.\u201d He says: \u201cThis is a call to arms to the world of property. We\u2019re saying, \u2018if you want to work with us, form a queue here.\u2019\u201d<\/p>\n
The now familiar backdrop to this move is uncertainty and pessimism about future government funding for public bodies and a London population zooming towards 10 million over the next 15 years. To adapt a well-known phrase, TfL has to be mindful of funding gaps. More people living in the city means providing more transport services to help them and the further droves who just work in and visit the capital get around the place. The less money national government provides towards the cost of doing that, the greater the discomfort for the travelling public and the more upward pressure there is likely to be on fares. Every stream of readies is invaluable.<\/p>\n
Of course, public transport and the wider development of London have always been intimately connected – where the Underground laid down tracks, homes, business and entire suburban settlements have followed. TfL is already in the property business and has been for a long time, renting out space from Ruislip to Purley to the Embankment to shopkeepers and other businesses, notably under railway arches, and even letting flats. At another level, funding for the Northern Line extension into Nine Elms is to flow from the area\u2019s private sector-led regeneration. TfL has already activated its partnership development model with the controversial demolition of the Earls Court exhibition centre and its planned replacement with a \u201cvillage\u201d of high priced flats under a joint venture with Capital and Counties (Capco). It\u2019s the realisation of an idea first discussed in 2007.<\/p>\n
The latest initiative is a formal scaling up of this joint venture approach. TfL is quite sure it has convinced developers that it is public body, albeit large and sometimes unwieldy, that they can do business with. A team of property experts will be appointed to work to Craig and there will also be a one-day-a-week non-executive group of four or five in support, to be chaired by Francis Salway, a former chief executive of Land Securities and now chair of London First\u2019s Crossrail 2 taskforce.<\/p>\n
How important is all this to London\u2019s future? The projected \u00a31.1bn will be part of the \u00a33.4bn of non-fares revenue TfL aims to generate between now and 2025. Its finance managing director Steve Allen acknowledges that, in the context of an overall annual TfL budget of \u00a39-\u00a310bn, the additional income generated won\u2019t be \u201ctransformational\u201d but says it is well worthwhile to be \u201cbuilding a commercial business that sits alongside our traditional funding streams of the fare box and grant from central government and in a sense reduces our reliance on them.\u201d<\/p>\n
A bigger concern for some will be that TfL will end up doing more for the bank balances of big time real estate players than it does for most Londoners. As Allen explains, the joint venture approach means TfL sharing the risks as well as the possible profits. The TfL Bill, designed to give the transport body greater freedom to set up partnerships and subsidiaries, is still toiling through parliament faced by determined opponents who fear, among other things, repetitions of the catastrophic private-public couplings for the upgrades of the Tube that have cost TfL and London dear.<\/p>\n
The TfL men insist, though, that the capital\u2019s interests are paramount, and that it is better that they will be co-stewarding building in and around transport nodes – the most productive places to be doing it – rather than simply selling up and leaving the job, and the income, to someone else with narrower priorities. \u201cBringing together the property development skills with the transport operations expertise and getting those things to work together is what will make or break this venture,\u201d Allen says.<\/p>\n
Earls Court, though, is not a comforting precedent. Of the 1300 or so dwellings planned for the exhibition centre site, not a single one will be \u201caffordable\u201d, however loosely defined. That might mean more money for buses and trains but it also means fewer homes for London\u2019s great un-rich than could have been supplied and a greater likelihood of a sterile, rootless neighbourhood. Was that the best deal for London? Was it the most responsible re-use of precious public land?<\/p>\n
Craig and Allen emphasise that borough councils necessarily define the initial framework for development plans. The Earls Court site straddles two of them, Kensington and Chelsea and Hammersmith and Fulham (H&F). The first is forever Tory. The second is now Labour-run but at the time the Earls Court project was conceived was in the hands of evangelical free market Conservatives led by Stephen Greenhalgh, nowadays heading Boris Johnson\u2019s office for policing and crime and running a campaign to succeed him as mayor. His administration\u2019s approach was to put the developer behind the steering wheel. \u201cWith Earls Court, as you know – and this isn\u2019t me backing away from what was done – the planning was led by CapCo across the masterplan area,\u201d Craig points out. Mayor Johnson green-lighted everything eagerly.<\/p>\n
That masterplan area also includes TfL\u2019s Lillie Bridge depot in H&F, for which proposals will be brought forward in due course. \u201cWe\u2019ll get into a discussion at that time about the level of affordable,\u201d Craig says. He says he has already started sitting down with various boroughs to find out what they\u2019re trying to achieve for their residents in terms of transport, land use and public realm. He and Allen stress that they\u2019re looking to the long term, with transport provision, commercial income from retail, office and residential property (including private rental) and creating a sense of place all at the heart of what they\u2019re doing. \u201cWe\u2019ve gone through months of consultation over Northwood,\u201d Craig says. \u201cPeople care deeply about their local station. We have to provide something that will help create a really good town centre.\u201d<\/p>\n
By early 2016 we\u2019ll know which TfL partners will be developing which sites. As investment in London\u2019s public infrastructure becomes increasingly dependent on exploiting the value of its public land, TfL\u2019s endeavours will be closely watched and their outcomes keenly scrutinised, not least by aspiring and future London mayors.<\/p>\n
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