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Will Alsop first set up practice in 1981 with fellow Architectural Association graduate John Lyall. In 2000 he formed Alsop Architects and in the same year won the RIBA Stirling Prize for Peckham Library. This year the practice, which now has offices in London, Singapore, Toronto, Beijing and Shanghai, joined the SMC Group to form SMC Alsop, where it continues to push for 'risk-taking' design.

Blackfriars Road is currently one of London's development hotspots, as developers and their architects line up to transform the area with new office and residential developments. While Southwark Council ponders the future of Blackfriars Road as the site for a new cluster of tall buildings, including the Beetham Tower, Will Alsop's very much medium-rise Palestra has been not only completed on a site opposite Southwark tube station but also fully pre-let, with Transport for London (TfL) taking the entire building and subletting two-and-a-half oors to the London Development Agency (LDA). The LDA will have its own front door at ground level, with a public exhibition area housed in a typical Alsop 'pod', a species most of us first became familiar with at the Stirling Prize-winning Peckham Library, just a couple of miles from Palestra.

Characterised by Charles Jencks as an architect who has 'self-consciously pursued the iconic building as a goal in itself', Alsop is revealed in this project as a rational builder who can cope with the spec development agenda and produce a highly saleable product. Palestra (which started as 'Southpoint' and is likely to be renamed again by TfL) is one of a series of recent buildings - the Fawood Children's Centre, the Goldsmiths' College block at New Cross and the Queen Mary medical school - by Alsop's practice (now SMC Alsop) that manage to be economical, practical and also visually memorable, adding that element of enjoyment that Piers Gough did so well in the 1980s, but which today seems to be Alsop's preserve.

Called 'Palestra' because the site was once occupied by a boxing venue (the word derives from the Greek for a sporting arena), Alsop's building replaces Orbit House, an unremarkable 1960s Seifert job, used as a store by the British Library. When Orbit House was built, Southwark was a bridge too far for potential office tenants, but everything changed with the advent of the Jubilee Line extension, the development of The Cut, and a new Richard MacCormac-designed Tube station on the corner of Blackfriars Road. (The new Southwark station, which links to Waterloo East, was intended, like some of Charles Holden's Northern Line stations, to carry a development on top; this has so far failed to materialise. ) Planning consent for Southpoint/Palestra was given in 1999 - before the opening of the extended Jubilee Line - the clients being Stuart Bailey and Mallory Clifford of Blackfriars Investments (also the initial clients for Alsop's Victoria House scheme in Bloomsbury and the proposed Puddle Dock across the Thames in the City). A few years passed as Bailey and Clifford looked for development partners - there was scepticism that a development so far from the river would work commercially.

There was equal scepticism from letting agents that Alsop's architecture was tailored to the tastes of the market. 'We don't wear grey suits every day - why should we be stuck with grey buildings?'

Alsop asked. He proposed that Palestra be a building with strong form and vivid colour. The formula had worked elsewhere in the commercial field - at the Harbour Tower in Düsseldorf, for example. With Palestra, Alsop proposed to expand the decorative agenda, working with Pilkingtons to develop new techniques for baking coloured patterns into the glazing. The agents, in love with grey metal, effectively vetoed the idea. As Alsop's project architect Duncan Macaulay says, their advice now seems perverse: 'We were seen as arty and insufficiently commercial, but the use of colour is a strong element in the high profile of the building, and is what attracted TfL', he believes. The glazed envelope now features nothing more than panels of vivid yellow. 'We got knocked back somewhat on the colour issue', Alsop admits - while expressing satisfaction with the building's final appearance (see pages 37-39).

Behind the facades, the 28,000m 2 Palestra is actually a very streetwise commercial proposition, with big 3,000m 2 oorplates, 100m long on a 7.5m grid with a maximum width of 36m, and condensed central cores. Initially, there was provision for a dealing oor, subsequently deleted from the programme.

One bank looked at the building, Macaulay recalls, and rejected it on the grounds that there was 'social' housing across the street.

The context is actually memorable, with the elevated railway line into Charing Cross enclosing the site to the north and the tracks into Blackfriars striding across the Charing Cross line immediately to the east. The low-rise setting means that views out of the building are excellent. There was extended debate with Southwark planners about the height of the development, and a proposal to add a layer of penthouses did not find favour. In other respects, the completed project is very much as it had been envisaged seven or eight years ago. The key architectural idea is clearly that of breaking up the box by cantilevering the upper oors over the road. At the seventh storey the oor steps back to provide a generous external terrace - another extravagant gesture in the eyes of agents but, again, one that helped to sell the building.

At its eastern end, the building leans 2.5º out of vertical.

Palestra was developed on a design-and-build contract, with SMC Alsop novated to Skanska, and Richard Ellis as project managers. Alsop's designs appear, however, to have been faithfully realised, with a good standard of internal detailing. The main reception area is a light and elegant space, enlivened with artwork by Kate Dineen which everyone, apparently to the annoyance of the artist, compares to giant Smarties. The 'cunningly sloped' (Duncan Macaulay) reception desk is a classic Alsop design.

For him, the key feature of the building is the way in which it meets the street. The ground level is partly open, the upper oors appearing to rest on characteristic Alsop-esque legs. This covered space was intended to be public domain: there were ideas for a café or shops here. Now the LDA's shop window will be the attraction, displaying a changing selection of current development projects.

For those emerging from the Tube station - the principal publictransport gateway to Tate Modern - this space is a natural marker at the end of Union Street. Just as satisfying are the more distant views of the building, especially as seen from The Cut, where it forms a very effective end-stop. Illuminated at night, it has an equally positive presence as the soffit of the tilted box lights the space beneath. The scale of the building is extremely well-judged for its location and sets an obvious pattern for future development in the immediate vicinity.

SE1 (or 'South Central' in agent-speak) seems to be booming - even with some assistance from the public sector, which looks likely to underwrite a start on Renzo Piano's 'Shard' in 2007.

The contentious issue of height continues to dominate much of the debate about future development in Southwark. Although there is a case for building high close to the river, buildings on the scale of Palestra fit more comfortably into the urban fabric of inner Bankside. While developers clamour for riverside sites, Southwark Council's grand projet (extending over the next 15 years) is the redevelopment of the Elephant and Castle. The future success of this area is dependent on its connection to Bankside and Borough, and Palestra points the way to further development in the Blackfriars Road/Union Street/St George's Circus area where, again, high-rise buildings would be inappropriate.

Palestra is clearly an important project for Alsop - his largest to date in Britain if the Jubilee Line station at North Greenwich, with its major civil-engineering component, is excluded. Southwark is now an established office location, with Norman Foster's More London still growing and Allies and Morrison's Bankside 123 scooping up some excellent lettings.

Both these developments include a number of office buildings plus areas of public space and retail/hotel/cultural facilities. Both are middle-rise schemes, on a scale comparable to Palestra. Where the latter scores is in its boldness, swagger and sheer effrontery - its refusal to be polite and put on a grey suit.

Much has been written about Alsop's professional problems (and the difficulties affecting The Public arts centre in West Bromwich) in recent months, some of it distinctly gloating.

But there is no evidence that SMC Alsop is a spent force, nor that its creative fangs will be drawn by the new proprietors - as Alsop says, 'they want us for what we are'. A certain strand of British architectural criticism has never warmed to his work, but the Palestra project is a major advance for his practice. It is also one of the most exhilarating new commercial buildings to be completed in London for some time, with a pizzazz, dare I say it, that rivals Seifert on top form, back in the days of Centre Point.

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