Developer puts £300m Norton Folgate mixed-use scheme out to tender
British Land has dealt a huge blow to Kier after deciding not to stick with the struggling firm on a major mixed-use scheme in London called Norton Folgate.
Kier had long been tipped to land the £300m main contract after being appointed to carry out pre-construction work at the Shoreditch site on the City fringe.
But in a statement, British Land said it was now opening up the job to other firms: “Kier has done a fantastic job leading the pre-construction phase and supporting the enabling works for our Norton Folgate development and we’re very grateful for their hard work.
“However, in agreement with Kier, we will be commencing a tender process for the main build contract to find a new partner to take the development forward.”
Kier, which is due to announce its full year results on 19 September, has faced months of damaging headlines about its financial situation with new chief executive Andrew Davies beginning a cost-cutting drive which will see 1,200 jobs go by the middle of next year. The firm has also put a number of its businesses up for sale, including its housebuilding arm.
Its share price, which at the start of this week last year closed at 924p, has borne the brunt of flagging investor confidence in recent months. At the start of this week, it closed at 81p, a fall of 912%, giving the £4.5bn turnover contractor a market cap of just £127m.
In a statement Kier, whose other major developments in the capital include a building for Facebook at Argent’s King’s Cross site, said: “We have been working closely with British Land and are pleased to have completed the design and preconstruction phase of the Norton Folgate development. We have mutually agreed not to proceed with the main build element of the project and wish them every success with the development.”
Rivals said British Land’s decision was indicative of the sort of issues now facing Kier as it attempts to keep worried clients on side.
One said: “If I was on the pre-construction phase of a job and then it came out to tender like this, I’d be peeved. But if I was facing Kier’s financial problems, I’d understand British Land’s position.”
And one major London developer added: “When you’ve shareholders to answer to [like British Land], do you really want to work with [Kier], given all the problems they’ve got?”
Last month Kier, along with Interserve, lost its spot on Scape’s new slimmed down framework for public private partnership work.
Building understands that Bam, Skanska and Multiplex are all looking at the Norton Folgate scheme which has attracted opposition from conservationists who are concerned over the impact on the area’s historic warehouses.
Demolition contractor Cantillon is on site carrying out work to make way for the 335,000 ft² development.
The Norton Folgate proposals, which have been drawn up by an AHMM-led design team were given the green light in January 2016 by then London mayor Boris Johnson.