When developer Lindsey Ashworth told Liverpool residents about his company’s plan to spend 5.5 billion pounds ($9 billion) rejuvenating the city’s derelict docklands, he didn’t hear any applause.
“They were banging and kicking the tables and giving me a real hard time,” said Ashworth, a director of U.K. property company Peel Group, recalling a 2007 meeting. “I thought I’d leave the building to find that my car had been turned over.”
It was the start of a rocky relationship between the Manchester-based developer of the Liverpool Waters project and preservationists concerned that the plans will render a 296- year-old UNESCO world heritage site unrecognizable. Both sides have said they don’t want to make further concessions over what would be the U.K.’s biggest property development and Peel may not continue the fight if the dispute leads to a public hearing.
“If the government says ‘we’re not sure about this,’ why should we spend another two years and another couple of million pounds trying to prove it’s right,” said Ashworth, 54.
The 30-year Liverpool Waters project would scatter skyscrapers on a 60-hectare (148-acre) site, adjacent to the landmark Royal Liver Building and two other towers dating from 1907 that line the waterfront of the maritime mercantile city.
Shanghai Tower
The plan includes the 55-story Shanghai Tower, a cruise line terminal, as many as 9,152 new homes and 305,000 square meters (3.3 million square feet) of office space. Around 14,800 jobs will be created over that period, Peel says.
The project is part of the 10 billion-pound Peel Waters redevelopment that straddles the river Mersey and includes the peninsula known as the Wirral. The 4.5-billion-pound Wirral Waters project was granted final approval in November.
Objections to the project aren’t just about history. Doubters also question the wisdom of adding so much property to a city that has shrunk by half since 1931 and has a commercial property vacancy rate that’s double the U.K. average. Ashworth argues that the sheer scale of Liverpool Waters will draw tenants and investors, just as Peel’s MediaCityUK development has in nearby Manchester.
Liverpool Waters will be assessed by the Liverpool City Council’s planning committee in June, according to councilor Malcolm Kennedy. If it’s approved, state-funded preservation group English Heritage has the right to raise objections and refer the matter to Communities and Local Government Minister Eric Pickles. He can either call an inquiry or let the council’s decision stand. English Heritage plans to present a report to the committee detailing its disagreements with the plan.
UNESCO Site
Liverpool’s waterfront and docks won UNESCO World Heritage status in 2004. As one of world’s major trading centers in the 18th and 19th centuries, the ports and docks expanded the reach of the British Empire, transporting both slaves and emigrants from northern Europe to North America. A plaque at Clarence Dock commemorates the 1.3 million Irish who fled the potato famine from 1845 to 1852, most passing through the dock’s gates.
Liverpool’s unemployment was among the highest in the U.K. during the 1980s as dock machinery replaced workers and manufacturers such as Tate & Lyle Plc (TATE)’s sugar works closed down. In 1981, a lack of jobs fed racial tensions and poverty, causing nine days of continuous rioting in the city’s Toxteth area.
‘Symbol of Failure’
“By the 1980s, it had very much become a symbol of all that was failing in post-industrial Britain,” Graeme Milne, a lecturer of modern history at the University of Liverpool said by phone.
The waterfront experienced its first large-scale revival in the mid-1980s, when work began on transforming the Albert Dock area to a district with shops, hotels, housing and the Tate Liverpool museum.
The docklands, though, has endured several rebirths since then. It has increased its offering as a leisure and dining destination following the construction of the Liverpool One shopping mall, which added more than 160 shops in the city’s center.
“Albert Dock has had to rethink its purpose periodically,” Milne said. It’s now the most-visited destination in the city, according to Liverpool’s tourist information website.
New York Rival’
In 2006, Peel unveiled Wirral Waters and followed it with Liverpool Waters in 2007. Peel planned to create an “international waterside destination” to rival New York, Shanghai and Sydney.
Henry Owen-John, North West regional director for London- based English Heritage, said Peel’s plans don’t say exactly what will be built and the construction of four levels of underground parking may damage archeological remains. The group will “seriously consider” objecting to the plan as it stands, he said.
The city council’s task will be to determine the balance between protecting heritage and economic regeneration, Owen-John said by phone. “We think the two could get into bed together perfectly reasonably. But we’re not quite there yet.”
The Liverpool Waters skyscrapers were designed to complement waterfront structures including the Royal Liver, Port of Liverpool and Cunard buildings, known as the Three Graces.
Peel has already taken steps to address English Heritage objections, enduring delays that cost the company “millions” of pounds, Ashworth said, without being more specific. The docks project has been scaled down by around 20 percent and the Shanghai Tower was moved away from the waterfront. The number of tall buildings has been cut to nine from about 20, he said.
‘No Second Prize’
“It’s like a boxing match,” Ashworth said. “If you lose a public enquiry that’s it, there’s no second prize.”
The decaying waterfront tells the tale of a city that’s been in decline for decades. Reminders of Liverpool’s once- booming economy are scattered along the streets around the docklands. Red brick grain and tobacco warehouses sit dormant behind 10-foot high shuttered gates.
“All these dock-related and imported good-related industries disappeared, so the areas around the dock became an area of quite substantial unemployment,” said Kennedy of the Liverpool council. In some parts of city, unemployment is as high as 50 percent, he said.
Some locals say they can’t understand why the city would need new office towers and rows of shops when so many existing ones are empty. Liverpool’s population has fallen every decade, from a peak of more than 845,000 in 1931 to fewer than 445,000 in 2008.
‘No Demand’
“We’re not nimbys,” said Tony O’Leary, a Liverpool resident and pensioner living near Waterloo Quay, using the “not in my back yard” acronym. “There’s a shortage of proper housing in this country and Peel’s building big, bloody apartments. Nobody wants them.”
The vacancy rate for commercial property in Liverpool city center was about 16.2 percent in 2009, almost double the U.K. average and an increase from 9.3 percent in 2000, according to a study by White Young Green Plc.
“There’s lots of vacant office space in Liverpool,” Panmure Gordon analyst Rachael Waring said in an interview a short walk from The Cavern Club, where Liverpool natives The Beatles played hundreds of early shows.
The property housing Panmure Gordon’s offices on Liverpool’s Chapel Street is about two-thirds full, Waring said. Buildings nearby are draped with advertisements for available office space. Prices are as low as 15 pounds a square foot, according to Panmure Gordon. Prime rent in the City of London financial district is about 54.50 a square foot, Savills Plc (SVS) estimates.
Budget Cuts
Prime Minister David Cameron, who visited the 17 million- square-foot Wirral Waters site in January, is looking to the private sector to boost employment as his government cuts thousands of state jobs to slash the U.K.’s record budget deficit. Liverpool is facing some of the deepest reductions with around 35 percent being sliced from its budget over the next two years, said City Council spokesman Paul Johnston by phone.
In Manchester, 32 miles to the east, 2,300 employees of the British Broadcasting Corp are being relocated to Peel’s MediaCityUK development on Salford Quays. ITV Plc, the U.K.’s biggest commercial broadcaster, is moving its Manchester-based operation to the site in 2012.
“Peel creates markets,” Ashworth said in the chairman’s glass-domed office at its Trafford Centre-based headquarters. “Everywhere we’ve gone, there’s been empty properties but the enormity and magnitude of the development has created a market.”
Record-Breaking Deal
Privately owned Peel agreed to sell the Trafford Centre, the U.K.’s seventh largest mall, to Capital Shopping Centres Group Plc (CSCG) for 748 million pounds in shares and bonds last month. The price is the highest ever paid for a British property.
Liverpool needs something to fuel growth as the government cuts begin to bite, said Kennedy of the city council.
“They know it’s coming,” he said. “Life is just like that at the moment.” Later that day, he planned to tell employees of 2020 Liverpool, the city’s seven-year old property and professional services partnership with Mouchel Group Plc (MCHL), that they may lose their jobs.
Source: Chris Spillane, Bloomberg.com
