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What's wrong with property developers making money?

By Stuart Pemble on Mar 31, 08 03:10 PM in Commercial Property

Regular readers of this blog (OK - I admit I am deluding myself here, but I've wanted to write a line like that for ages) will have noticed that my last piece (on the redevelopment of the Library) elicited a forthright response from Claude - for which, many thanks.

Claude is not a fan of what he sees as the massive disruption which redeveloping Paradise Circus will cause. He draws a comparison with the developments currently taking place at Five Ways and raises some strong (and strongly-put) arguments - some of the buildings being knocked down are architecturally excellent (and deserve to be maintained) whereas the replacements will be anodyne, unnecessary and expensive mixed-use schemes. To make matters worse in Claude's eyes, all of the redevelopments are motivated by the lure of filthy lucre.

Whilst I disagree about the architectural merits (or lack of them) of the 60s buildings which are up for demolition, it's that last point that got me thinking. The suggestion is that making money out of property development is somehow a bad thing. Why?

First, I must declare an interest. Doing my day job, I act for property developers. I act for lots of other people as well, but helping property developers achieve a successful (and profitable) outcome does help to pay the mortgage. I don't think that disqualifies me from commenting, but I thought I'd best be open about the issue.

Having got that out of the way, I must admit that I'm a bit flummoxed by where to start. Leaving aside perhaps the most obvious point - businesses have to make money otherwise they fail - I would go so far as to argue that you end up with better buildings if you allow there to be profit than if you don't.

Developers take on a lot of risk. To take the most extreme (but still common) example, they borrow money to acquire the land, which they then develop into the sort of project they hope will attract tenants or homeowners to occupy the buildings and (assuming the buildings and tenants are right) which might be sufficiently attractive to persuade someone like a pension fund to buy the investment. That's an incredibly difficult trick to pull off - and lots of people don't manage it.

But the key point is that the buildings have to be attractive to potential users and occupiers. If they're not, then the developer is going to take a serious bath. I'm not an architect - and what I'm about to say may go against the architectural grain - but I think that, in order to be successful, buildings don't just have to look great. The key for me is that they have to work as spaces which attract people to them (and I would suggest that the old Edgbaston Shopping Centre and Paradise Circus fail that test). The built environment is our built environment. It is the spaces in which we live, work and play. I want those spaces to be as attractive, fun and enjoyable as possible. Allowing property developers the opportunity to make some profit out of their developments is the best way I've come across of making that happen.

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9 Comments

Claude said:

A bit of a straw argument in places i,e "The suggestion is that making money out of property development is somehow a bad thing" (I never said that and no-one advocates Soviet-style state-managed planning), otherwise paradoxically I agree with some of what you wrote.


So let's see.


You write: "In order to be successful buildings don't just have to look great".


Exactly. Take a look at a significant number of city centre "luxury pads". Not only do they look like hives (not all of them, but certainly a good few), but they are also built on the cheap. I won't mention any specific names and locations for obvious reasons, but I can tell you horror stories endured by friends of mine or myself.


Brand new, mega-expensive, glossy (on paper) "21st century" apartments were cracks appeared within months of moving in, along with leaks, dog-like fittings and installation, crap insulation, etc...


The current marketing campaign is so anxious to portray Birmingham as a "European hub", using cliches as "cafe culture", "urban living" and similar, but you won't find the same proliferation of Clone Shopping Malls and Mixed Use in Paris, Rome, Barcelona or Berlin. Mixed Use is abhorred by most Europeans, precisely cos it's impersonal, anonymous and -ugly-.


And I hate to say that, because I love Birmingham, and I guess if I'm spending time typing up this stuff, it's obviously a sign that I care about it.


Now, on to the second aspect:


John Madin went on record as saying that no other city in the world would be so light-hearted in demolishing some carefully planned buildings of architectural merit. I have to agree with Madin.


I remember when I was at Uni there were people coming to Brum on purpose to look at BBC Pebble Mill or the Post & Mail building!!! And to think those two buildings were pulverised in seconds.


What is so wrong with restoring???? That's what generally happens in most European cities, for goodness' sake. But it's obviously not as financially rewarding.

Now, if the Central Library was to be replaced by a Museum, or a Square or something architecturally or culturally significant, I'd be saying "bring in the bulldozers and do so now!". But the fact is, it's gonna be another "mixed-use" area, the same you could get in Sheffield, Cardiff, Manchester, or a 100 yards down the road in Brum.


One final thing. I know you can't bite the hand that feeds you and fair play to you for declaring your interest. But the way you portray those "poor" developers almost brought tears to my eyes. They must be starving, poor little things.


Except, everyone knows, it's one of the most rewarding businesses on earth. By far. Entire countries based their economic fortunes (followed by recessions) on the building industry.

Nothing wrong with profit. But yes, something wrong with profiteering.

Claude said:

Stuart,
I realise my latest post comes across as quite blunt. That was unintended and let it be known it's a pleasure to debate with you.
Thanks,
Claude

Hagley Road to Ladywood

http://www.mymarilyn.blogspot.com

Stuart Pemble Author Profile Pagesaid:

Thanks Claude. I think we probably need to agree to disagree. Rest assured - no offence taken.

Emma said:

Stuart,

Love the blog. I think you're a really good blogger.

Bit disappointed you haven't addressed Claude's points though. I'm interested to know why you think we don't restore more buildings in Birmingham. Why do we seem to always adopt a "knock it down and start again approach"?

Stuart Pemble Author Profile Pagesaid:

Thanks Emma.

I think Claude makes a number of different points which fit into two main categories: (i) he doesn’t like what we’re doing to the city centre now and (ii) he is concerned that property developers are guilty of profiteering. That second point may come down to a question of what’s an acceptable level of profit margin. I imagine most of us may well have differing views on that.

To answer your question, I don’t think it’s the case that we knock everything down. Baskerville House and the Mailbox are two recent examples of very successful redevelopments of existing buildings in the city centre.

I think the question “why doesn’t restoration happen more often?� is in part a question of personal taste (do you like the 1960s buildings or would you rather they were replaced?), partly a question of economics (it may cost proportionately more to redevelop an existing building than to replace it) and quite a lot to do with the planning regime and what the Council wants for the city centre. It’s clear that they’re not fans of the brutalist buildings and I have to admit that I agree with them.

In my experience, the economics question may be the key one. 1960s buildings do not conform to modern office standards and refurb costs (to get them to the required standard) can be excessive.

Rob Blyth said:

Stuart,
I have just discovered your blog.
I am interested by the debate on conservation, refurbishment, demolition and redevelopment.
You are right that different people have different tastes in architecture and I for one have always been a fan of the Madin Library building.
In terms of sustainability every building must have a viable use and thus be fit for purpose. In the case of the library I used to feel that had it been properly maintained that it could have been retained. Although brutal in its architecture it was designed for a particular purpose.
I understand that the librarians are of a view that it is not fit for purpose by today's standards.
For that reason I feel that the time has come for a new building and I think that the City's (and Mike Whitby's) view that we have the opportunity to create something that we and future generations can all be proud of is commendable.
I will get on to the thorny subject of development profit and quality of design and materials in another blog as I now need to get on with trying to make some "filthy lucre"
Keep it up
Rob

John said:

I'm interested in this debate having been a resident of brum in the past and also a town planner myself, working soley in the private sector for private developers/house builders.

its interesting to read about people's desires to see 1960s architecture retained and restored. buildings designed in the 60s had a certain style and were appropriate for the day. for many though they have started falling apart and the cost of restoration in comparison to the returns that someone buying them and doing the restoration does not make it viable.

if a public body was to come along and say we'll restore a duff old building for the sake of retaining a piece of history what would your response be to that? good use of public of funds or terrible waste.

unfortunatley public bodies dont come along too often wanting to do the above so its left to the private sector to make the most efficient use of land - a limited commodity in this country. and leaving monuments to bygone ages of architecture that has no place (in my opinion) in the modern day really isnt hte way to go.

Stuart Pemble Author Profile Pagesaid:

Thanks John. I had thought that this debate had come to an end. I think you make an excellent (and honest) point. What are your thoughts on the debate being had under the What's Brum's best new building? blog. People have strong views which echo some of the issues raised here as well.

ruth said:

John,

Your attitude to 60s buildings is rather out-dated.

Not only do many of the buildings of this period have significant merits (visit any other forward looking UK city and you'll find buildings of this period being imaginitevly reused) but there are strong environmental reasons for not simply demolishing and rebuilding everything.

Birmingham is slightly unfortunate in the sense that it seems to be permanently afflicted by a mentality that believes the buildings of the recent past are not worth keeping. Every generation we have a wholesale demolition of what our fore-fathers built, usually just as the rest of the country is developing an appreciation for what was briefly deemed unfashionable.

This is exactly what happened in the 60s and 70s when the city systematically destroyed most of its fantastic Victorian architectural legacy. Today we are taking the same short-sighted approach to the buildings that replaced so Victorian structures - knock 'em down!

Already with the loss of the old Madin-designed Post and Mail building we've seeen the needless demolition of a building that was beginning to gain national attention as a great example of its kind. The ironic thing about the redevelopment of the site is that the new building is actually a poor immitation of exactly the same kind of architecture - ie Miesian inspired corporate glass and steel. But few in Birmingham seem to understand the perversity of what is going on.

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