Wilkinson Eyre Architects' plans for a new £110 million tower in the City were in the balance this week after site owner Marks and Spencer said speculative developer Churchill Properties' 'aggressive' attempts to do a deal made no sense in planning or financial terms (AJ 20.7.00). But furious Churchill managing director David Rees said the troubled retailer would be mad to proceed with its scheme, given the slide in its fortunes, and should sell up to get the maximum value out of the site.
The Wilkinson Eyre scheme, revealed in the AJ last week, is for a slim 34-storey office and retail tower on the site of a new nine-storey retail and offices scheme currently being built by BDP for M&S on Fenchurch Street in the City.
Tower developer Churchill Properties this week launched an aggressive public campaign to force M&S to relinquish the site.Rees said the M&S building was 'a massive under-utilisation of the site' and that 'huge additional value could be created by pursuing Churchill's alternative £400 million plan. 'I am offering them their money back on the site purchase, a split of the profits and the opportunity of occupying a store within the new scheme, ' he said.
But M&S hit back this week by saying that there was 'absolutely no deal' and that Rees' arguments were flawed on three accounts: that the nearby Leadenhall Market was a conservation area; that there was a precedent set when planners rejected a nearby tall building by British Land; and that when M&S bought the site from Barclays Bank there was a covenant inserted which meant that any building on the site could not go higher than the bank's new building, across the road.
'This kind of thing has been going on for three and-ahalf years and all his [Rees'] schemes have been investigated, ' said a spokesman for M&S'property division. 'We've found that they have no merit and it's just the latest curved ball he's thrown at us.'
Rees originally offered to buy the site from Barclays Bank in 1997 but was beaten by a £40 million bid from M&S. Now he is putting the pressure on, and is trying to get M&S shareholders to do the same. Rees told the AJ that the firm had actually bought out the Barclays Bank covenant on height restriction from the City and added that he was angry that the M&S property team had rejected invitations to meet up to discuss the bid. There was a 'huge differential' in value between the two.'The development we're preparing has an end value of £420 million to £450 million.We could demolish their scheme and still come out ahead.'
Rees attended the M&S AGM last week but the issue was not raised, although it is believed that it is being now discussed at board level.
Jim Eyre told the AJ it was not an issue to do with the designs of the respective buildings. But he added that if nothing comes of his designs it was a 'missed opportunity' since it was one of only a few sites large enough to take such a tall construction.