… so says property tycoon Gerald Ronson on his plans for London's first luxury office tower. He talks exclusively to Claer Barrett about his ambition to create a Savoy among offices.
The City of London is full of invisible towers. As the central London development cycle spins towards boom time, market conditions are ripe for the glitzy computer-generated imagery to transform into skyscraping reality.
One of them will be Gerald Ronson's £700m Heron Tower, named after his development company Heron International. The 244 m high, 46-storey landmark on Bishopsgate in the City of London project will be the culmination of Ronson's 50 years in the property business, during which he developed 151 buildings in nine countries. Construction will begin next year, delivering 42,000 m2 of speculative office space, including a conference centre and sky bar restaurant at the top levels.
An office tower is one of the most technically and financially challenging projects to pull off in any property cycle, and some would argue it's no coincidence that London's vertical assault is being led by three tycoons longing to leave an indelible legacy on the capital's skyline. Ronson, Irvine Sellar, who is behind the Shard of Glass, and Sir John Ritblat, chairman of British Land, which will develop the nearby Broadgate Tower, are all over 65.
Ronson is not swayed by this argument, however. "We've never looked at the Heron Tower as an egotistical symbol for Gerald Ronson," he says, seated in his luxurious office in Marylebone. "We take pride in our buildings, whether it's an iconic building, or whether it's in the skyline of London."
More like a sumptuous hotel suite, Ronson's office, with its deep pile carpet, huge teak desk, leather furniture and aroma of expensive cigars, matches his old-fashioned, gentlemanly demeanour. Not that you can feel entirely at your ease. Anyone who has worked with Ronson over the years testifies to his blunt, no-nonsense approach to deal making - he apparently makes Sir Alan Sugar look tame by comparison - but his drive and determination to succeed is equally noted.
An old-school entrepreneur, a sign next to the telephone on his desk reads: "It CAN be done." Ronson, who has ridden out the ups and downs of three property development cycles and was famously jailed in 1986 for his part in the Guinness scandal, is no quitter.
His determination to get the Heron Tower through a costly six-and-a-half-year planning battle is matched only by his ambition for it to be the most advanced and envied office building in Europe, if not the world. He is also close to securing funding for the project, with details due to be announced any day. In recent weeks he has appointed Philip Lewis, the former UK head of American developer Hines, as his new head of investment to work alongside his development guru Peter Ferrari at Heron.
Speaking exclusively to Skyline, Ronson reveals the blueprint for what he describes as his "six-star office"; a new concept in high-rise space that has more in common with an international hotel than the office buildings of today.
"You may well ask, ‘What is a six-star building?' because everybody says they're building a class A office building, although that's a matter of opinion," grumbles Ronson. "The Heron Tower will be one of the most prestigious buildings in Europe, attracting international occupiers who need to have the best-dressed and premier facilities for offices in London."
The tower is designed to be multi-let; because of the 1200 m2 average floorplate, it is not expected that a single occupier will take more than 10,000 m2. Ronson expects the bulk of demand will be from companies coming into London from the US, Europe and, as years go on, India and China - companies that require up to 2000 m2 of "prime, prime space".
Putting on the glitz
Designed by Kohn Pedersen Fox, the inside of the tower will mirror the glitz of its shimmering exterior. "We have some spectacular ideas for the entrance hall in particular," he reveals, adding that he is after "the wow factor".
"Most office buildings you go into have marble, granite, a bit of water maybe, nice desks. You'd say, ‘Well, this is very nice.' When you walk into the entrance hall of the Heron Tower, you've got to say, ‘Wow, this is where we want our office.' Now, you won't make up your mind at that particular point, but you'll be on the way to making it up. When you get out the lift, you'll feel the same - and the software we're installing means you won't wait more than 20 seconds for a lift at any time.
Some of our competitors have rightly said thank you, although I haven’t yet seen any financial contribution from them
"When you look at the floors, the height, the atriums, the quality of the toilets and the facilities, you'll think, ‘We've got to have this because there's nothing to compare to it'. If the rent is a bit more than what you first thought, you will pay it. If you want commodity space, this is not the place to go to. Don't even waste your time getting out of the taxi - it's as simple as that."
A major component of the "six-star office" is the provision of services you would expect from a top-class hotel. "If you are offering a six-star product, you can't deliver a three-star service," Ronson says. In the past, he has spoken wistfully of white-gloved doormen and hotel standards apply to the central reception, too. "You can ring down to the concierge to get you a car to the airport, book you a restaurant, get a special meal brought in - whatever your requirements are," he says. "We could have 20 to 30 tenants in this building with a particular profile, so you manage it as a hotel manager, not as an office manager."
"At least two-thirds of the customers in this building will be international representative offices," Ronson continues. "Blue-chip tenants who took 750 m2 floors in the Heron Tower in New York spent a fortune fitting them out, had very few people actually working in the offices, but wanted a six-star service - which is what we gave them. And the cost was not an issue."
Businesses both inside and outside the tower will pay extra to make use of services within the building. At the top of the tower there will be conference facilities, private dining, a public restaurant and a sky bar overlooking London. These will have a separate access with high-speed lifts from the street.
The influence of the best
"We've looked at the best hotel and office buildings across the US, the Far East and Europe covering all aspects of development, marketing and letting, and that input has gone into this building, and will continue to go into it," says Ronson.
"We know what our management culture is - it's detail, detail, detail. Everybody in the Heron team is committed to creating the best product of its kind in London, Europe, perhaps the world. If you're building on spec, you've got to have that confidence; that's the only way you'll make real money out of development."
Since planning permission for a taller version of his tower was finally obtained in January, Ronson's funding adviser CB Richard Ellis has been busy trying to secure £125m from four equity backers - "there are institutions who are partners, but they are not all institutions" - and Heron will invest £20m of its own funds. The building will be owned by an offshore limited partnership and the balance of development costs are likely to be funded through bank finance. Ronson estimates the end value of the tower will be between £600m and £700m.
Prime rents in the City market now hover around £52/ft2, but Ronson's promise to redefine the meaning of prime has pushed up his rental expectations. "Given the quality and uniqueness of the building, we're confident of setting a benchmark on rental levels," he says. "The tower will secure top City rents in the market place. We can offer a flexible combination of open-plan or cellular offices."
Six-star rents for a six-star office
Although he has yet to appoint an agent, Cushman & Wakefield has been providing advice throughout the project's gestation. "This is not hype, the building will be to the standard of a six-star hotel and a step above anything you've seen before," says Bill Peach, head of City offices. "It will achieve better than top rents. If it was delivered to the market today, it would achieve well north of £60/ft2, but by 2010, who knows? Rents are moving upwards across the City. If you are building something that is genuinely iconic, occupiers in London will pay to be in that kind of building. It goes beyond the cost of rent - the status of being in that building will affect their business more."
Despite the competition within the City - particularly from other tower schemes - Ronson's confidence is not dented. "Some will be built, some won't. The fact is, we paved the way," he says of the planning battle. "Some of our competitors have rightly said thank you, although I haven't yet seen any financial contribution from them."
He expects the glamour of the tower will attract West End and Canary Wharf occupiers back to the Square Mile. "It's no different to selling any other quality product, creating a brand which they are prepared to pay a premium for," he says. "Someone who wants to stay at a Holiday Inn doesn't go to the Savoy. That market may not be there for 5 million ft2, but is that market there in London for 1 million ft2, whether in the City or West End, in an iconic building in a particular year? The answer, I believe, is yes. Is London ready for this? Should London have it? Of course."
Skyline May 2006
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