We now know roughly how much the new US Embassy cost, but from London’s point of view the real value is in the regeneration of Nine Elms, writes Paul Finch
A good article in the current issue of Property Week investigates whether the move of the US embassy from Grosvenor Square to Nine Elms is the ‘bad deal’ that Donald Trump has criticised – in the context of a presidential visit which conspicuously ignored the embassy building. Presidential criticism was partly based on a series of (how can one say this tactfully?) inaccuracies, not least the entirely erroneous claim that it was a project initiated by President Obama, when in fact it was signed off by George W Bush.
One should be relieved that it is the location that inspired criticism and not the architecture, though Kieran Timberlake’s sophisticated exercise in environmental design would strike no chord in the presidential heart.
Property Week focuses on the detail of the deal and, by dint of digging in the Land Registry, has come up up with the goods on who paid what and to whom – a well-kept secret during and after negotiations. The US government bought the site from Ballymore, the housebuilder which bought up tracts of Nine Elms after losing interest in purchasing Battersea Power Station. The site cost £120 million; add £500 million in construction costs and some additional costs for leasing the old embassy during construction, and you hit the ‘£1 billion embassy’, the most expensive in US history. However, there was a balancing income derived from sales of the old embassy and associated buildings which netted £615 million, so not a bad outcome for the US taxpayer.
Although Property Week did not go into this aspect of the story, the cost could have been considerably higher if a US bid for the Chelsea Barracks site had been successful. Readers might remember that the Candy brothers, acting with Qatari Diar, paid more than £900 million for the vacant property. The partners then fell out and the project became the development that never was (by Rogers Stirk Harbour with social housing by Allford Hall Monaghan Morris). This was mainly the result of the notorious intervention by the Prince of Wales, who lobbied the similarly unelected hereditary ruler in Qatar to scrap a development which had won support from Westminster planners.
You might have thought that the US government would have been able to outbid anyone, or alternatively that the UK government would have sold the Ministry of Defence barracks site to our chief ally. In the event, though the sum has never been officially confirmed, the US bid came in third, at least £200 million behind the Candys’.
You might have thought that the US government would have been able to outbid anyone
No doubt President Trump would have regarded the Chelsea/Belgravia location as more appropriate than south of the river but from London’s point of view, the move to Nine Elms has proved catalytic for the regeneration of this neglected, though central, part of the capital. Wandsworth Council, which did absolutely nothing for decades in respect of the area, is now the fortunate recipient of council tax deriving from the multiple residential developments which have taken place – not least by Ballymore – since the Americans decided to move there. No doubt the decision to sanction an extension of the Northern Line to service Nine Elms was made easier by the presence of the embassy.
So, despite Trumpian complaints, there is cause for celebration about the impact of the locational decision, and one might add a word of appreciation to property sage William Jackson, who advised the US government on the property deal when he was at Cushman & Wakefield (he is now at TfL).
This is an intriguing London story, not least because of the involvement of the Grosvenor Estate, which owns the freehold of the old embassy site (the Saarinen embassy itself is being converted for hotel use to designs by David Chipperfield). When the US government wanted to buy the freehold on the Grosvenor Square site after the Second World War, Grosvenor said it would only sell the freehold if the US gave it back properties confiscated after the American war of Independence. Since these properties comprised large chunks of Florida, that was a deal never likely to happen. The compromise agreement was quite long-term, however: a 999-year lease.