Regeneration projects at and around rail stations can be hindered by investors’ concerns over their viability as well as lack of local support. But taking a creative, practical and flexible approach can increase the chances of success, believes Philip Beer, a partner at law firm Burges Salmon who specialises in advising both public and private sector clients on major regeneration and redevelopment projects.
“It’s a question of working up a strong business plan that is realistic about the timing for the development programme and the likely returns that will be achieved. You need to be creative and develop a vision, and then articulate that vision to bring on board all the local stakeholders,” says Beer.
Local opposition to schemes tends to focus on poor design, lack of affordable housing and little perceived benefit for users of the rail station or the community around it, Beer notes.
“People will gravitate towards inspiring, inclusive projects. It is about properly engaging with all stakeholders – Network Rail, other landowners, train operators, councils and local people. This can be hard work, but it’s very worthwhile because it mitigates risk. The more people feel comfortable with what you are doing, the more they will be onside, and the quicker and easier it will be to go through the planning and approvals process.”
Trying to push through unpopular local schemes will invariably lead to delays, says Beer. “Once you start getting caught up in planning appeals or judicial reviews, this severely impacts on the viability of the project.”
Successful projects are those where the public sector – chiefly local authorities and central government – have taken a balanced approach to risk. “These are the projects where it is recognised that some risks should be taken on by the private sector entity, as it will get a good return. But the public sector may be better placed to take other risks – which, if left to the private sector, would make the project much more expensive.”
The rise of ‘patient capital’
Beer senses a shift towards ‘patient capital’, where the investor does not seek a quick profit but is willing to take a longer-term.
This will help lay the foundations for well-designed, people-friendly schemes at and around rail stations, he says. “There appears to be a recognition that some of the more rapacious capitalism that happened in the past was not necessarily helpful. Patient capital is about being in it for the longer term, understanding the business will take the yields and revenue over a longer term, with the associated benefits that come with that.”
Nonetheless, getting private finance for regeneration projects can be difficult if investors are reluctant to take a long-term risk. “You may need to look at innovative ways to fund a project. There might be sources of funding from government departments not normally associated with transport. For example, the Department for Education supports projects that improve access to schools. Public sector money for projects is, in some senses, the most reliable source of funding because the rate of return is not as high as that which is demanded by the private sector.”
Projects on or around station land can also benefit from other sources such as the business rates levy, which helped fund Crossrail, and tax incremental funding, which is being used by TfL to help fund construction of the Northern Line extension. “This is a levy paid by businesses along the route of the line that are essentially going to benefit from it,” he explains. “It’s about finding innovative methods of funding, through some kind of levy or rates, or land ‘clawback’, which takes into account a future increase in land value created by the scheme.”
There are clear investment benefits in placing new developments in areas with good transport connections, says Beer. “A well-connected development will always do better than ones further out of the way and less convenient, even though they may be cheaper.”
Modal shift away from the car is increasing the appeal of residential developments around and near stations, he suggests. “We are seeing more and more people not driving or learning to drive in the way they once did. People see it as an advantage to live a 10-minute walk away from a station. And then you have the prospect, perhaps in 10 or 15 years from now, of autonomous vehicles connecting with public transport, which is going to lead to some very different urban landscapes.”
An example of a well-delivered project, says Beer, is the regeneration of King’s Cross Central, a scheme led by property developer Argent.
The project turned an industrial wasteland into a new area in central London, with homes, shops, offices, galleries, bars, restaurants, schools and Central Saint Martins arts university.
“The Argent scheme at King’s Cross is always cited as a great example of how to do stakeholder engagement well and how to regenerate a community,” says Beer. “It shows how to regenerate an area while not ignoring the wishes of local people. The university means there’s now a vibrant student population in the area and you also have the likes of Google moving in. If you said 20 years ago that King’s Cross would be a desirable office location for major multi-national companies I think people would have fallen off their chairs with laughter.”
The Argent project benefits from its close proximity to the HS1 line, the new St Pancras station and the upgraded King’s Cross station. “You have good access to the stations and you’re in the middle of London. But from aside from that, the project shows how regeneration and redevelopment can be done really well.”
Find out more about successful rail-based development at the Rail Stations and Property Summit
Philip Beer is a highly experienced real estate lawyer who specialises in advising both public and private sector clients on major regeneration and redevelopment projects – particularly developments involving or adjoining railway assets.
He is a member of the Development Committee of the British Property Federation. For the last few years, he has chaired the annual UK Stations & Property Summit. This summit drives the thinking about city/town centre regeneration by making the most of land/assets at and around railway stations.
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