Graeme Craig is poring over plans for one of London’s biggest new housing developments. The models show a mix of low and high rise buildings, 4,500 homes, alongside cultural venues and parks, which will rise from the rubble of the now demolished Earls Court exhibition centre.
Craig Runs Transport for London’s property arm – he was appointed its first commercial director more than a decade ago. TfL’s day job is running the capital’s bus and underground network, but it has held on to its land, and 22 years after its creation it remains the third biggest landowner in the capital, after the emirate of Qatar and the mayor of London. It could soon be one of its biggest housing developers too.
Over the next decade, Craig has drawn up plans to build more than 20,000 homes, with 1,650 already under construction.
“We hope to be building homes for decades to come,” he says. “I’d be surprised and disappointed if we weren’t the most impactful developer [in the capital].”
The largest development is Earl’s Court, where construction is expected to start in 2025 and take 15 years, with plans to create up to 15,000 jobs. The vision of the Earls Court Development Company, set up by TfL and Delancey, is “to bring the wonder back” to a once iconic music and events venue. But it is a vision that has been delayed and revised, and details are scarce at this stage. The developers went back to the drawing board after protests over plans to demolish two council estates, which have since been handed back to Hammersmith and Fulham council. The new masterplan is expected to be submitted by October 2023.
TfL’s property arm owns 2,226 hectares (5,500 acres) of land across London, 1.5% of the area of London. The portfolio is valued at £1.7bn, comprising of the land around stations and 800 railway arches.
Rather than selling off its profitable assets, TfL set up a separate property department in 2012 to develop the land and manage the properties. Nearly two-fifths of the current portfolio is shop space, but TfL wants to become a bigger player in offices and housing.
“Hybrid working is here to stay. The firms with offices in place in central London are going to work harder,” says Craig.
“People will not just come in to send emails. You want it to be somewhere people want to come in to work,” he says. “We’re not thinking about desks in rows where people are staring at screens – people can do that at home; offices are there for things you can’t do at home.”
Younger people will have to be coaxed back to the office, he says, and offices will need to have pleasant headquarters, open, flexible meeting spaces and other attractions – although TfL’s won’t feature swimming pools and basketball courts, like the new Google at King’s Cross. “It’s possible to have fun at work without playing basketball,” Craig says.
The property arm is wholly owned by TfL, which collects all its profits, but otherwise separately run. Other projects include three big office developments that have planning permission at Paddington, Southwark and Cannon Street stations, and it is constructing a series of apartment blocks across London in partnership with build-to-rent specialist Grainger and others. It recently secured £200m from three banks which will give it enough funding for the next three years.
TfL hasn’t held on to all its sites. It was criticized for selling off the “family silver” – its former Grade I-listed headquarters at 55 Broadway overlooking St James’s Park – to a hotels entrepreneur for £120m in 2019. It also sold land above Crossrail stations, which has generated £300m so far and is expected to bring in £500m in total. But Craig insists that TfL will only sell assets that do not fit with the portfolio.
Half of the 20,000 homes planned will be classified as affordable – a higher proportion than many other developers achieve. A big chunk – about a third of the housing – will be for rent.
With other partners, TfL is also building 479 rental homes and commercial space above and around the new Northern line station in Nine Elms, south of the river, as well as 619 homes across eight buildings in Kidbrooke in Greenwich, 50% of which will be affordable – a mixture of shared ownership and London living rent.
Unlike Network Rail, which sold off thousands of railway arches for £1.5bn to the Blackstone private equity group in 2018 – a controversial deal that pushed up rents for many small businesses and forced some out – TfL has held on to its 800 railway arches.
“In the arches we’re increasingly seeing a focus on things that are experiences – whether that’s great food or other experiences, something that’s different from being sat at home on the internet,” says Craig. “There is going to be more fluency between work, home and leisure.
“We are predominantly an SME landlord,” Craig adds. The vast majority of TfL’s 1,500 tenants (93%) are small and medium sized shops and other businesses in the tube stations and arches.
Carmen O’Neal, the 36-year-old founder of the Hackney gin distillery 58 and Co in east London, the UK’s first female-run distillery, which opened in July 2019, says: “I built a distillery on my mat[ernity] leave. I found the arch when I was pregnant and wanted it so badly.”
TfL was supportive through the pandemic and charged the company no rent while it had to shut in line with lockdown rules and lost 95% of its business. During that period, she stopped making gin and switched to producing hand sanitizer instead for the NHS and the Met police.
The solar panel-powered distillery reopened last July and runs gin-making classes at the front of the arch, while it produces, bottles and labels gin at the back. O’Neal, from Canada, says unlike other landlords she had in the past who were “uncontactable, I’ve never felt that way with TfL”.
The car workshop
Jack’s Garage in Ladbroke Grove in west London, owned and run by Joseph Salama, occupy three railway arches owned by TfL. The business, founded in 1995, is a VW specialist workshop and has moved into conversions from cars to battery operated electric vehicles, which cost from £30,000 to more than £100,000 depending on the vehicle generation and equipment installed.
Salama says TfL came to the company’s rescue after the nearby Grenfell Tower fire in 2017, when the roads were closed for several weeks and it could not receive deliveries of car parts. TfL granted the garage a six-month grace period and also handed over two arches for an extended period to a local grassroots charity helping the survivors.
During the Covid pandemic, TfL granted all tenants in the area a three-month rent-free period and another three months at half the usual rent. “They’ve really helped the local community,” he says.