Transport for London has officially launched itself into its promised new role as a property developer, submitting planning applications for three London sites.
Schemes in Nine Elms, Northwood and Parsons Green are predominantly residential in format, and are just the first step in a major new thrust to help TfL extract more value from its property estate. They will create the first 600 of an anticipated 10,000 homes to be developed across London, which TfL hopes will generate substantial funding for the transport giant in years to come.
“The three planning applications we have submitted are the first step in our ambitious programme of development, which will create much needed homes, jobs, offices and retail space across London,” said Graeme Craig, director of commercial development at TfL.
“We are working closely with local communities and boroughs to shape these proposals so that they meet local aspirations and deliver real local improvements. The three sites demonstrate the varied nature of our landholdings, and the potential they have to create economic growth across London whilst providing vital revenues to invest in running and modernising the transport network.”
At Nine Elms, a development on top of the new Nine Elms tube station proposes 362 homes, of which 25% will bre affordable, with 2,318 sq m of office space, and small retail units. There is also public space for play and cycle parking. Crucially, the income from this scheme will help pay for the Northern Line extension.
In Northwood, a new tube station is proposed, with 127 homes adjacent to it, along with a new bus and train interchange, and 1,300 sq m of retail space. This development will disrupt existing occupiers, with whom TfL is liaising over relocation, ahead of the redevelopment.
The third site will make use of a former tube train depot in Parsons Green, delivering 119 homes of which 40% will be affordable, along with supporting commercial space. It will also open up three railway arches for business use.
All three projects are expected to be delivered with partners, who are still be chosen via a selection process that was started earlier this year.
The sites are the first fruits of a plan announced in January 2015, when TfL said it hoped to raise £3.4bn over the next decade from commercial development. As an organisation with a 5,700 acre property portfolio, it acknowledges it is sitting on one of the most valuable estates in London. But it also faces substantial cutbacks in grant funding, and is only too aware it needs to sweat its property assets, to help deliver cash to fund the growth of London’s transport system.
Having previously sold off sites, it is now looking to be actively involved in development, in order to capture more of development profits. There will also be a consideration about cashflow from the property created, possibly by retaining rather than simply selling off completed schemes.
A first swathe of 75 sites has been shortlisted, of which two thirds of the sites are in zones 1 and 2, and just about all of them are alongside rail or bus stations. “This is only the first wave of sites,” Craig told the Financial Times in October. “We are also looking at zones three to five, which we expect to bring forward next year and will be used to build more affordable housing for Londoners.”
A tender process in the spring aimed to select a small number of property partners, with whom to work in partnership. “Previously, we sold assets and properties we no longer needed, but in recent years we have taken a new approach to retain and invest in a number of sites to generate long-term revenue and the best results for London,” said a TfL statement.
In May, a shortlist of 16 companies was drawn up, from an initial response of more than 50 potential partners. The list included housebuilders, and major London developers such as Stanhope, British Land and Grosvenor.
A first joint venture, with Capital & Counties over the Earls Court redevelopment, was signed in early 2014. As well as putting land into joint ventures, TfL has said it is also prepared to invest cash, to get developments moving.
LPA Perspective: This shift to put TfL on a much more commercial developer footing is potentially very exciting for London. Here is a massive landowner, with the potential to build thousands of new flats, exactly where the PRS developers have already told us people want to live – adjacent to a station.
In fact, should TfL decide to hold onto the flats it builds, it could become the capital’s largest private rental landlord.
The first three proposals look promising. And so long as further projects start to feed through, we can thank Capital & Counties for treating TfL gently in their Earls Court joint venture, and Francis Salway, the non-executive chair of TfL’s property advisory group, for injecting further commercial impetus into the organisation.
TfL needs to balance its financial needs with planning pragmatism, to get the job done. Recently, planners in the City of London have twice turned down Crossrail’s plans to develop an office block over one of its Farringdon station exits. The normally collaborative City found Crossrail demanding what it felt to be an overbearingly large block, arguing it needed to maximise its returns to help pay for the railway.
Potential property partners were asked to make quite a commitment in preparing their tenders, and it is understood that the shortlist of 16 may not be pared down again, as TfL keeps its options open when it comes to picking the right partner, and aims to accelerate the pace of site preparation. There could be something for everyone, as TfL’s development aspirations gather momentum.