Modern Commercial Developments
Early Days
Before the LDDC's inception, the local authorities had
made efforts to attract new firms to the Isle of Dogs and
Docklands. They had some success: the City Corporation
relocated the Billingsgate fish market on the north quay
of the West India Docks, and Associated Dairies (ASDA)
were persuaded to build a much-needed superstore on
the Mudchute. (ref. 218)
The LDDC did, therefore, have a basis upon which
to work. Initially, it sought to attract new firms involved
in high-technology industries and services, such as computing, electronic and micro engineering, design and
marketing services, and printing. (ref. 219) In fact, the earliest
developments were relatively small-scale, courtyard-style
business units on the pattern set by the Port of London
Authority's Cannon Workshops (1982–3), or, following
the example of the new Billingsgate Market (1980–1),
high-tech 'shiny sheds'. The Lanterns (1983–4, Plate 140c),
Indescon Court (1982–3) and Skylines (1985–6, Plate
, 140b ) are all courtyard-type schemes, while Milltech
(completed in 1984), the PDX and Ladkarn Buildings
(both completed in 1985), and Advance House (completed
in 1987, Plates156b , 157b) are examples of 'shiny sheds'.
Generally speaking, these buildings were typical of those
on contemporary business parks being built all over the
country. However, Design magazine pointed out that there
was a rather greater 'profusion of exterior detailing' than
normal. It suggested that one reason for this was the
LDDC's wish for new buildings which caught the attention and could attract further development. (ref. 220) Not only
were such schemes small-scale, but they provided relatively few jobs. By February 1987 roughly 250 of the 300
new companies which had moved into the Isle of Dogs
since 1982 had fewer than 13 employees. (ref. 221)
The Enterprise Zone
In order to provide substantial inducements for firms to
move into Docklands, the Government, with effect from
April 1982, designated much of the area centring around
the West India and Millwall Docks as an Enterprise
Zone, as provided for under the 1980 Local Government,
Planning and Land Act, with the intention of encouraging
and speeding up development. The boundary was carefully drawn to exclude those sites which had already
been, or were in course of being, developed, such as
Billingsgate Market (see plan C). (ref. 222) The chief financial
concessions were: freedom from local rates for a ten-year
period until 1992, no development land tax, and 100-percent capital allowance for new commercial and industrial
buildings, to be set against corporation and income taxes.
In December 1986 the Financial Times, in announcing the
proposed relocation of its printing works to Docklands,
calculated that the £20,850,000 cost of the site and
building would be reduced to £15,400,000 by the tax
concessions offered in the Enterprise Zone. (ref. 223)
In addition, there were simplified planning procedures:
the zone was set up with an overall planning scheme,
and any proposed development that conformed to that
scheme was deemed to have been given planning consent,
unless it was considered a particularly sensitive site and
therefore specifically excluded from the general planning
provision. (ref. 224) Similarly, development within the zone was
normally free of 'use class' planning controls, so that a
structure originally intended to be a factory or warehouse
could be converted to office use during the course of
construction, without requiring further permission. (ref. 225)
This relaxed attitude to planning was seen by some critics
to produce an 'architectural zoo' or museum of selfcontained exhibits where few parts seem to fit well
together. (ref. 226) While such an attitude initially encouraged
developers, it was eventually seen to be acting against
their best interests. Brian Edwards argued that 'the
buildings constructed to date run the risk of poor connections in terms of both public space and urban transport, and have little protection from unsuitable or
unfriendly neighbours'. (ref. 227) Certainly, Olympia & York
were quick to intercede with the LDDC over any planned
schemes which seemed to threaten the setting at Canary
Wharf.
Peter Hall was acknowledged by the Government as
the originator of the idea of Enterprise Zones. He was
one of the authors of the New Society article in 1969,
and the Enterprise Zone concept owed much to the 'nonplanning' philosophy advocated there, as well as Hall's
subsequent 'Freeport solution' to the economic ills of
inner cities, in which 'small, selected areas . . . would be
simply thrown open to all kinds of initiative, with minimal
control'. In fact, in the latter case, he conceived much
more freedom from legislation, including a complete
absence of immigration controls, than the Government
was in fact prepared to countenance even in Enterprise
Zones. (ref. 228)
'Wall Street on Water'
In September 1985 the Financial Times commented:
one of the last remaining areas in which docklands has yet to
prove itself is in its ability to provide a feasible and attractive
overflow location specifically for the City. Until recently, there
have been virtually no signs that it was succeeding, either in
encouraging institutions to fund City-oriented projects or in
convincing traditional City occupiers to move to the docks. (ref. 229)
Nevertheless, 1985 and 1986 were to be a watershed in
the development of the Isle of Dogs, although the effects
were not immediately evident. A number of factors
combined to increase the attractiveness of the area as an
alternative location for City-type offices, and to encourage
investors to back such schemes.
The new attitude was signalled when, in the autumn
of 1985, a consortium of North American investment
banks announced plans for an office development of eight
million sq.ft on Canary Wharf. (ref. 230) This, more than any
other factor, engendered confidence in the investment
potential of the area. Until that time most Docklands
developments had been under 100,000 sq.ft, but the sheer
scale of the proposals for Canary Wharf encouraged other
developers to think in terms of much larger schemes. (ref. 231)
The second important factor was that from April 1986
Enterprise Zones became even more attractive to those
companies and individuals seeking shelter from their tax
liabilities. A general 75 per cent initial allowance against
tax for investments in industrial buildings anywhere
in the United Kingdom was abolished for expenditure
incurred after 31 March 1986, except in Enterprise
Zones. In November 1987 Accountancy Age, referring to
Docklands, argued that 'there is little doubt that the
capital allowances have been a hugely important factor
in the developments to date', while an estate agent
involved in letting commercial properties claimed in
November 1989 that 'the justification for building vast
amounts of space on the Isle of Dogs has not been
occupant driven, but tax driven'. (ref. 232)
The third factor which helped to increase office
development on the Isle of Dogs was the 'Big Bang' in
the City in October 1986, when trading in stocks and
shares was deregulated and new technology was introduced. As a result, new firms sprang up, existing ones
were seeking to expand and were looking for more modern
facilities. Moreover, as the Financial Times pointed out,
'the City of London, caught off balance by the speed of
the revolution and determined to resist any development
which threatens its architectural heritage, has so far
been unwilling or unable to respond'. (ref. 233) Furthermore, in
October 1985 the Bank of England announced that
banking firms were no longer required to remain within
the City's square mile. (ref. 234)
Quite rapidly, therefore, the Enterprise Zone became
regarded as an alternative to the City as a suitable venue
for offices. Already in the summer of 1986 Norman
Tebbit, then Secretary of State for Trade and Industry,
was predicting that the West India and Millwall Docks
might become 'Manhattan-on-Thames' or a 'Wall Street
on water'. (ref. 235) By December of that year just over 14.6
million sq.ft of actual or potential office space had either
been built or was planned on the Isle of Dogs, most of
it within the Enterprise Zone. (ref. 236)
The effect of all this was, firstly, that low-rise developments in the course of construction, such as Great Eastern
Enterprise, which were envisaged as a mixture of lightindustrial and office use, became entirely offices, (ref. 237) and
secondly, plans for unbuilt phases of existing developments were quickly revised. At Great Eastern Enterprise
the final two phases, begun in 1987 and completed in
1989, consist of two office blocks of five and six storeys,
in contrast to the two-storey units of the first phase. At
Heron Quays, a near neighbour of Canary Wharf, the
developers decided in 1986 to increase the gross area of
development from 650,000 to 1,500,000 sq.ft. (ref. 238)
New developments were now, very largely, office
blocks, usually built on a speculative basis, and often
initially comprising medium-rise buildings. An example
of this is the first phase of South Quay Plaza, begun in
1985 and completed in 1987, which became the Daily
Telegraph's new offices, designated Peterborough Court.
Thames Quay, nearby, is another medium-rise development which was built in 1987–9, although plans were
originally drawn up in 1985 (Plate 139c).
This medium-rise phase was quickly followed by a
high-rise one, reflecting greater confidence and increased
funding from investors keen to be involved in Docklands,
and influenced by the tall towers envisaged for Canary
Wharf. Thus, for instance, the plans at Heron Quays
were again revised in 1988, this time envisaging towers
of 25 and 30 storeys, while subsequent plans, announced
in 1990, proposed two sail-like towers of 36 and 46
storeys. Harbour Exchange, completed in 1990, is an
example of an extensive high-rise office development,
providing 1.25 million sq.ft of accommodation on a tenacre site (Plate 140b). In some cases the effects of these
three phases of development can be seen within a single
scheme. At Waterside, for instance, where work began in
1984, the first block is a two- and four-storey building
of 40 small-business apartments which was completed in
1987. Then came the medium-rise Beaufort Court (fig.
271), Quay House and Ensign House, completed in 1987
and 1988. The final block, South Quay Waterside, is a
high-rise, 24-storey office building, completed in 1992.
As developments became more and more office-orientated, not only did the scale of the buildings change, but
also the smooth marble-clad and tinted-glass curtainwalling, already employed by office blocks in the City
and in the great international business centres throughout
the world, was adopted. Richard North, commenting on
this new type of Docklands building in June 1988, wrote:
They are Meccanoed together in steel frames, providing huge
floor areas free of pillars. Then, to add the excitement their
architects aspire to, semi-circular or triangular steel work is
planted on top. Often its shape-work is no more than drapery.
Sometimes, there are atria: multi storey glassed spaces which
might, if you were very lucky, remind you of the glass work at
Kew Gardens, and the genuine fun of Decimus Burton and
Joseph Paxton.
Many of the new offices have token additions of stone facing.
In the case of the Telegraph building and its bigger brother, the
thing is made to look as though its ground floor was solid stone
blocks. In reality, the "blocks" are wafer thin and make arches
like a stage set's. (ref. 239)
Large-scale office developments attracted a number of
City businesses and institutions to the Isle of Dogs.
Among firms which had their headquarters on the Island
by 1990 were the Regency Life Group and two City
accountants, Littlejohn Frazer and Price Waterhouse.
By then, international bankers included Merrill Lynch
Europe at Greenwich View, and the Italian International
Bank at Heron Quays. At Coriander Avenue, just to the
south of East India Dock Road, the London Telehouse
had computer suites intended as data centres for international finance houses. The institutions represented
included: the Association of International Bond Dealers
in Limeharbour; FIMBRA - the financial regulatory
body set up by the Government - at Hertsmere House;
and the Stock Exchange, which had a computer centre
at Greenwich View. In 1992 the Western University of
Phoenix, Arizona, opened its London Business School at
Glengall Bridge. (ref. 240)
Although the transfer of a major Government department to Docklands now seems unlikely (see Canary
Wharf, page 712), in August 1991 the 530 staff of the
Government Export Credit Guarantee department moved
into Harbour Exchange, (ref. 241) and in 1992 the Department
of Transport took 8,000 sq.ft at South Quay Plaza 2 for
its London Docklands division. The central services of
Tower Hamlets Borough Council moved to Mulberry
Place on the East India Dock Site in the summer of
1993. (ref. 242) With the Jubilee Line extension going ahead,
2,000 London Underground staff will move into No. 30
The South Colonnade at Canary Wharf. (ref. 243)
Docklands was particularly successful in attracting
newspaper and magazine publishers away from their old
premises in the City or elsewhere in inner London. Quite
fortuitously, the development of Docklands coincided
with the moment when new technology was making
possible the physical separation of editing and printing
processes. This led to a mass exodus of national newspapers from their traditional locations in Fleet Street,
and, as with other types of firm, the financial concessions
offered by the Enterprise Zone proved a strong inducement to move to Docklands. (ref. 244) There are four such
newspaper groups - Telegraph, Express, Guardian, and
Financial Times - which now have printing works within
the Enterprise Zone, the first two sharing premises at
West Ferry Printers. The Telegraph also moved its other
staff to Peterborough Court, and subsequently to Canary
Wharf, and in 1994 Mirror Group Newspapers moved
1,000 staff from Holborn to Canary Wharf, where they
were joined in the same year by the Independent and
Independent on Sunday. Other publishers to take offices
in the Enterprise Zone are the Northern and Shell Group,
now at City Harbour (having moved from its own building
at Millharbour), Thomas Telford (the publishing offshoot of the Institution of Civil Engineers) at Heron
Quays, and the Builder Group at Great Eastern Enterprise. In addition, Reuters, the international press and
financial data agency, has built a data-centre on part of
the Blackwall Yard site, while FT Analysis, a Financial
Times subsidiary, providing a financial information
service, moved into Telehouse Europe in 1991. (ref. 245)
Private Financing and Investment
Much of the private investment in Docklands has come
from overseas, because, it has been argued, foreign investors were unaware of the problems that deterred more
local investors and the prejudices against the 'East End'. (ref. 246)
On the Isle of Dogs, Canary Wharf was developed by
the Canadian firm Olympia & York; Japanese firms were
involved at Ferguson's Wharf, Harbour Exchange, the
London Telehouse, and South Quay Plaza 3; Swedish
firms at the East India Dock site and the Price Waterhouse
Building; a Dutch bank at City Harbour; and a Kuwaiti
consortium at Meridian Gate. In October 1990 it was
stated that 70 per cent of investment in Docklands had
originated from overseas sources. (ref. 247)
A number of commercial developments within the
Enterprise Zone have been purchased by trusts set up as
tax shelters. In this way an investor who had put £10,000
into such a trust and who was paying tax at 60 per cent
would immediately recoup £5,700 in tax relief. The
balance could be borrowed through the trusts, and the
interest payments on this also attracted tax relief. At the
same time, the proportion due to the investor of rents
from the property purchased by the trust might provide
the repayments on any such loan. Thus, a series of
Property Enterprise Trusts (PETs) was set up by Rutland
Trust, which purchased buildings at Harbour Exchange,
as well as the Price Waterhouse Building and part of Nos
30–40 Marsh Wall. In the same way, Laser (London and
South-East Enterprise Zone Real Property) Trusts were
launched by Colegrave Johnson Fry (subsequently
Johnson Fry), which purchased Harbour Island (at
Harbour Exchange), the Isis and Wallbrook Buildings at
Thames Quay, another part of Nos 30–40 Marsh Wall,
and five buildings on the western phase of Glengall
Bridge. (ref. 248)
The commercial development of Docklands also
coincided with the introduction to the British property
market, in the mid-1980s, of 'off-balance-sheet financing'.
In simple terms, a company first decided to engage a
partner to share the risk of development. They then set
up an associate company, off their own balance sheets,
whose sole asset was the development. This associated
company raised finance against the security of the
development, so that there was no liability on the developers, except, for instance, when cost or construction
time overran. The developers entered into construction
contracts at a fixed price. Finally, the developers sought
to lease the building to a company before it was completed, or arranged to sell it once it had been completed.
In this way a profit of about 20 per cent of the value
might be obtained. Should the project fail it was the
financiers, not the developers, who were left with a halffinished, unlet, or unsold building. (ref. 249) At South Quay
Plaza 3 the joint developers, Marples International and
National Leasing & Finance, set up special companies to
carry out this development - Notchmixi and Gablewide and these companies were financed by an international
syndicate of banks. (ref. 250)
Reaction and Recession
As the pace of development on the Isle of Dogs quickened
and investors became increasingly eager to back schemes
in the area, so land prices rose rapidly: in 1981 land
values averaged £50,000 an acre, by March 1988 these
had increased tenfold, with waterside sites fetching over
£1 million per acre, and some particularly prime sites
reaching as much as £10 million an acre. (ref. 251) Yet commercial rents remained much lower than comparable
rents in the City. In 1988, when top rents for offices on
the Isle of Dogs were £20 per sq.ft, those in the City
were £60 per sq.ft. (ref. 252) Rents remained lower on the Isle
of Dogs, even after 26 April 1992, when properties
became liable to pay the local Uniform Business Rate. (ref. 253)
The original concept of Docklands was as an area of
fairly small-scale developments, with cheaply constructed
high-tech buildings, which, as the need arose, were
capable of a variety of uses. They were designed to be
relatively temporary in nature, so that they could either
be re-sited (as happened to the Ladkarn Building, see
below) or demolished to make way for a different type
of development. Canary Wharf and its many imitators
brought an end to this flexible approach and established
the Isle of Dogs as an area predominantly of office blocks.
The dangers of this were already becoming apparent
early in 1988, when it was predicted that the office market
in the Isle of Dogs would soon become flooded. According
to the Daily Telegraph:
So far only around one million square feet of offices have been
completed, and of that less than 800,000 is occupied. Little
space will be completed this year. The build-up begins in 1989
when over two million square feet will be completed, with
massive floor area coming on to the market in 1990–1992. (ref. 254)
Also, the challenge presented by Canary Wharf immediately persuaded the City to relax its planning controls in
1985, allowing the creation of developments over roads
and railways and on sites previously regarded as inviolable, so that another 20 million sq.ft of office development
was added within the Square Mile. (ref. 255) As a result, by the
end of 1993, half the City's stock of office accommodation
had been built since 1986. (ref. 256) Similarly, the City of
Westminster encouraged prestige developments, such as
the world's largest financial dealing room above Victoria
Station. (ref. 257) Furthermore, during 1987 and 1988 the
Government introduced a general relaxation of planning
regulations, allowing industrial or warehousing premises
to be changed to offices without requiring planning
permission, and thus taking away one of the distinctive
advantages of an Enterprise Zone. (ref. 258) So, by the late
1980s, Docklands was in direct competition with the City
and other inner London areas to fill new office blocks.
During 1989 some rents began to drop to about £16 per
sq.ft, as developers tried to attract tenants. (ref. 259) Among the
financial incentives then on offer in Docklands were
free fitting out of accommodation, six-month rent-free
periods, and other rental agreements advantageous to
tenants. (ref. 260) By October of that year it was claimed that 'it
is probably true that with such a vast amount of space
coming on to the market in Docklands nowhere else in
Greater London can a prospective occupier negotiate
such a comprehensive package of inducements'. (ref. 261)
By April 1990 the Daily Telegraph was nothing that:
'The property market in London's Docklands has marked
time over the last six months with only a handful of
lettings to companies not already represented in the
enterprise zone'. (ref. 262) By November 1990 there was 1.4
million sq.ft of vacant commercial property available in
the Isle of Dogs. (ref. 263) In the same year receivers were
called in at South Quay Plaza 3, where the development
companies found it difficult to let this phase of the
scheme, and failed to keep up with their interest payments. (ref. 264) Similarly, in March 1990 the shares of the
developer of South Quay Waterside were suspended, and
part of the development had to be quickly sold off and
the financial arrangements for the rest restructured to
allow completion of the scheme. (ref. 265) Yet in both instances
the first phases had been very successful. At Skylines,
where again the original part was sold very quickly, the
last stage has proved much more difficult to dispose of.
By February 1991 vacancy rates in the Enterprise Zone
were running at about 50 per cent, and only Canary
Wharf was regarded as part of the Central London
commercial property market. (ref. 266)
In the same month, office space at South Quay Plaza 3
was being offered at just £10 per sq.ft (compared with
about £30 in West London and £40 in the City), yet
even at this price it failed to attract tenants. (ref. 267) An earlier
and more modest building - Parker House, at nearby
Waterside - was available in April 1991 for £5 per sq.ft. (ref. 268)
At the same time, the Isis building at Thames Quay was
offered with a two-year rent-free period and no obligation
for a tenant to remain in the building after that date. In
the summer of 1992, according to the Estates Times,
accommodation was let at South Quay Plaza 2 at a rent
equating to 'substantially less' than £5 per sq.ft. (ref. 269)
By the spring of 1991 those seeking smaller accommodation could find sufficient cheap premises in the City
and only larger users were still considering Docklands. (ref. 270)
Fears began to be expressed that the Isle of Dogs had
become too dominated by offices, such specialization
leaving it vulnerable to economic decline, and the LDDC
revised its development plans in order to get a greater mix
of uses in the future. (ref. 271) The glut in office accommodation
appeared to be much greater than that in residential
property and existed throughout the whole of the London
region. In May 1992 about 20 million sq.ft of office space
was available in the City, and 14 million sq.ft was on the
market in London's West End. (ref. 272) In 1992–3 it was being
predicted by property experts that the chances of letting
some office accommodation in London during the next
ten years or more was extremely slim. (ref. 273)
Most worrying for the long-term future is the nature of
this new office accommodation. Much of it was specifically
intended for the financial services industry in the wake
of the 1986 'Big Bang' (see page 704). The offices
are, therefore, designed to meet the needs of the new
technology, with floor-to-floor heights one-and-a-half
times greater than those in a normal office block. This
allows the accommodation of air-conditioning with twice
the usual power, an electricity supply with three times
the regular capacity to run the computers, higher floor
loadings, and large unobstructed floors. (ref. 274) Yet the pace
of technological advance has been so rapid that by 1991
such office blocks had become largely obsolete and,
especially with the decline in the financial services industry, no longer met the current requirements of the
commercial property market. (ref. 275)
In a reversal of what had happened in Docklands a
few years before, developers began to consider converting
commercial space to residential accommodation, as that
market seemed likely to recover more quickly. At South
Quay Waterside the developers explored the possibility
of converting the small-business suites into student
accommodation, with about 1,000 bedrooms, but by
March 1994 this scheme had not been implemented. (ref. 276)
From 26 April 1992, the Isle of Dogs lost its Enterprise
Zone status. The most serious blow, for developers still
struggling to let commercial property, was that they then
had to pay 50 per cent of the Uniform Business Rate on
any empty buildings, amounting to about £3.50 per sq.ft
at that time. (ref. 277)