Unexpected rewards from life outside the Wharf

Over £3.5bn has been committed to Croydon Vision 2020 – the collective name for the town’s regeneration projects – which will stretch from East Croydon to West Croydon and Purley to Coulsdon. Among Alsop’s ambitions are to exhume the River Wandle – which currently runs under Croydon – to rid the town of its impenetrable gyratory system and to create a series of green areas in the town.

Croydon’s existing parks are also set to get some help, in particular Wandle Park, which recently won a £400,000 grant from Boris Johnson and a further £1m funding from the Barratt Homes development adjoining the site. However, Croydon Vision 2020 has encountered a problem: the worst economic downturn in history. So where does that leave the town’s makeover?

For a start, the largest development, Ruskin Square – an 8.5 acre site next to East Croydon station with space for 560 apartments, a new Warehouse Theatre and 900,000 sq ft of office space – has been scaled back. Rather than building speculatively, developers Stanhope and asset management company Schroders, will only begin building the office space once a lease contract has been agreed with tenants. The residential part is likely to begin construction this year but the apartments won’t be for sale – instead, they will be offered as an investment opportunity to institutions and managed and let by Stanhope and Schroders.

Meanwhile, to the north of East Croydon station, Menta’s Cherry Orchard Road development – comprising of 40,000 sq m of office space, parks, shops and cafes and 1,042 apartments – has yet to be given planning permission. “The market has forced a change in approach,” says Charles Wolford of Stanhope. “However, there are still people in poor quality office accommodation with leases coming up for renewal and London companies looking to pay a more economic rate.”

Commercial rates in Croydon average £23 per sq ft, while London’s average £52 per sq ft. However, the City’s rental prices are tumbling and Croydon’s are set to increase, with new office space estimated at £30 per sq ft.
Park Place – a 900,000 sq ft retail and restaurant scheme by Minerva – has also had problems. John Lewis had been expected to take over the majority of the site but it’s still at discussion stages and planning permission has yet to be granted. In fact, the only confirmed new retailer in Croydon is Waitrose, who will take over the existing Somerfield site by this summer. Then again Waitrose, with its deli-style produce and AB demographic, is a positive indicator of Croydon’s potential.

And make no bones about it: Croydon does have potential, especially as a business location. It’s a 15 minute train journey from Victoria and London Bridge and by 2012 it will be linked to the East London line. During 2006-2008 Croydon had the highest improvement in business start ups out of all London boroughs and the biggest increase in business density.

There’s over 660,000 sq ft of vacant office space in Croydon but the majority of it is dated and run down, making swish new office complexes, an attractive offer. It’s not only Grade A commercial space either – Prospect First, a 216,000 sq ft scheme in West Croydon and Impact House, a smaller mixed use development in South Croydon, will be aimed at small to medium sized businesses.

And with smart new business services comes a swathe of modern apartments around the town centre, including Odalisk, a two tower development that will house 90 serviced apartments, 397 residential units and 24,000 sqm of office metres; Altitude 25, home to 196 apartments and IYLO with 183 apartments.

Croydon Council has shown its commitment to the town’s regeneration by forming a partnership with John Laing to deliver a £450m Local Asset Backed Vehicle to regenerate sites in Croydon town centre and build a new council headquarters.

In the first deal of its kind, it will use an asset-backed Urban Regeneration Vehicle into which Croydon Council will invest land and John Laing equity. Through this partnership, the council will receive a 50/50 share in profits and will maintain ongoing control of the regeneration agenda by retaining an interest as a partner-landowner.

Croydon is far from a wasteland – it has a population of 330,000, over 20,000 businesses, such as Nestle, AIG and BT, and draws in 130,000 workers every day. However, that doesn’t mean that others will follow, especially during the current climate.

The town’s plans have been hindered by a lack of investor confidence and falling rental rates in the City. Many of the new residential schemes are being pushed at 2006 prices, while older stock is crashing in value. Why spend £250,000 on a two bedroom apartment when you can have a three bedroom house with a garden for the same amount?

There are similar problems with commercial property. Take up rates in Croydon last year totalled 140,000 sq ft compared with 258,500 sq ft in 2007. “Until two months ago, office rent had gone up every month but the recession has affected that dramatically,” says Neil Barer of Harold Stiles Williams. “A lot of companies aren’t moving and demand is down.”

Still, support for the town’s plans remains strong. Croydon Business – a commercial organisation offering advice and support to businesses – and Croydon Business Improvement District (BID), which was set up in 2007 and will invest £5m over the next five years to improve Croydon’s competitiveness, are both actively pushing the town’s development despite the adverse conditions.

“The recession has affected the plans for the town but it hasn’t dampened ambition,” says Joe Rowe of the Croydon BID. “We know Croydon has a negative reputation and we’re working very hard to change that perception. Since the BID began we have spent £100,000 a year on cleaning up the town and introduced a third 24 hour town police team.”

There are already the signs of success – knife crime was down 39.5 percent October to January, while youth related violent offences were down by 19.5 percent for the same period. There’s also been positive news from the high street, with footfall rising 1.6 percent last year, in comparison to a 4.3 percent drop in London.

The town’s efforts were recognised in March when it became the only borough in London to receive a Beacon award for economic prosperity, while just last year the borough was recognised as being the most enterprising borough in London. Of course, statistics and recognition are only a small part of the battle for Croydon – the rest is persuading City firms to relocate, investors to spend their money and retailers to set up shop. It’s a tall order during a period of such uncertainty, especially one that shows little sign of recovery for at least the next 18 months.

The hope now is that the City’s downfall could prove to be Croydon’s gain. “I think Croydon could benefit from the economic downturn,” says Brian Stapleton of Croydon Business. “I have a lot of enquiries from small and medium businesses who are looking to restructure and find a cheaper alternative to London. Business is done differently now – thanks to the internet and blackberrys everything doesn’t have to revolve around Canary Wharf. There is life beyond that.”