Property developer Sir Stuart Lipton reveals why he likes to upset the status quo

May 2008 Sir Stuart Lipton property developer profile

He created one of the most successful and progressive property developments in the City, lost it during the recession of the early 1990s and then re-built his business from scratch. Little wonder that Sir Stuart Lipton is lauded by his peers

If Sir Stuart Lipton ever gets stuck for inspiration, he can always look out of the window. Through the office blinds he can see the streets of London’s Mayfair below, which he says provide the perfect example of what commercial developers call mixed-use development.

To the uninitiated, mixed-use means retail, residential and office buildings all in one place—a combination designed to encourage communities to prosper. As a veteran of the property business, Sir Stuart knows a successful community when he sees one. Mayfair’s Grosvenor Street, and in particular, Grosvenor Square, are in his eyes the pinnacle of 18th century planning. “The Grosvenor family in the 1770s knew how to build something interesting,” he says. “They knew how to create value.”

He’s right of course. In what the EU now calculates as the richest urban zone on the continent, it currently costs £95,000 to buy a car parking space. Boutique jewellers line the streets, punctuated by yacht showrooms and secretive hedge funds. In pure planning terms, the Grosvenors were aiming high. “They knew that to create value they had to create squares and spaces, civic buildings, and churches. In that plan they produced the best mix-use centre in the country,” he says.

It’s an interesting history lesson—not least because it underpins the philosophy of one of our most feted commercial developers. Sir Stuart’s unmistakeable stamp can be found on more than 15 million sq ft of London office space, including some of the country’s most ambitious developments. The City’s Broadgate, west London’s Stockley Park and Chiswick Park are projects that define the capital as much as they define the developer. To fellow property tycoon Elliott Bernerd, Sir Stuart is an “architectural mentor”, while the architect Lord Richard Rogers, who designed the Millennium Dome and Heathrow’s Terminal 5, reckons “you’d be hard pressed to find a developer that’s raised the bar as high as he has”. He is an architectural alchemist, able to manufacture relevance and order from desolate scraps: Broadgate was built on a car park, Stockley Park on a rubbish dump and Chiswick Park on an old bus station.

Now reunited with former business partner Bernerd at Chelsfield Partners, he retains his view that commercial developments must invoke a sense of belonging. “You need communities: you need what I call a village green,” he says. Two of the firm’s current schemes, the redevelopment of Camden, north London and the renovation of Kensington’s Commonwealth Institute, focus heavily on community creation, although the latter project is more about modification than transformation. “There were plans to demolish [the Commonwealth Institute] but we love it as a building—it has an iconic roof,” he says. “The challenge is, how do we keep the main element of the building and create something adjacent that is just as daring as the [original] 1962 build?”

Sir Stuart is difficult to gauge. His precise, considered responses are delivered in a husky whisper completely at odds with his huge frame. “There’s a steely hand inside the soft glove,” warns Lord Rogers. You detect an amiable sense of impatience, too—an eagerness, perhaps, that stretches back to his formative years. Sir Stuart skipped university in favour of a quick start in estate agency. From there, he discovered a passion for development, and in particular an interest in the “efficiency of space”, eventually founding Sterling Land in 1970, and Greycoat, in 1976, both alongside Geoffrey Wilson.

It was at Greycoat where he first revealed a desire to do things differently. Mere development didn’t sustain him: Sir Stuart wanted to “invent”. The key was persuading talented, institutional architects to work with him. It wasn’t easy. Back in the late 1970s, all the best architects considered the act of pairing up with a developer sacrilegious. “Philistine developers like me were never thought to be appropriate clients by what I call institutional architects. They didn’t want to get their hands dirty,” recalls Sir Stuart.

Gradually, internationally renowned architects, such as Arup, began to “cross the line”. It proved to be the defining point in his career. That these institutional architects were actually more efficient than their “commercial” counterparts was a bonus. “Their building costs were lower, their construction periods were faster, their innovation was much higher, because intellectually they understood the subject. The commercial architects turned out to be much less commercial.”

The 1980s, of course, was a period of mass-deregulation, and the City of London, with its labyrinthine, old boys’ network was far from immune to Thatcherite tinkering. With the so-called Big Bang of 1986 came the rapid globalisation of the City, and with it a new appreciation for acres of prime office-space, filled to the brim with shiny new trading floors. Trailblazers such as Sir Stuart’s Greycoat and Godfrey Bradman’s Rosehaugh, cleaned up. Cutlers Gardens, Greycoat’s £75m commercial development near Bishopsgate, was the first of many innovative projects that used new materials, new design and new techniques to transform the landscape of corporate London. Borrowing fast-track modes of construction already used in the US, the projects were ambitious in both scale and design, and, unlike any other office space on the market, they incorporated Sir Stuart’s “Grosvenor” methodology.

With its brand new trading floors and civic core, Cutlers Gardens was in many ways a preparation for the Arup-designed Broadgate, an office development integral to the modern make-up of London. At the time, Margaret Thatcher dubbed it the “largest single development in the City since the rebuilding of London after the Great Fire of 1666.”

With its ice rink and pavement cafés, Broadgate redefined the boundaries of what corporate tenants expected from developers. It also gave Sir Stuart a new perspective: he saw the potential to use buildings as a vehicle for social change. “With Broadgate, I started to see the social side of life—the awareness that you can make a difference. What I could show you if I took you to decent projects is people behaving in a totally different way.” People walked further, it turned out, to reach Broadgate than any other commercial development in the City. It was less a development than a destination.

Peter Rees, city planning officer for the City of London, summed it up perfectly last year when he praised Lipton for his ability not just to build, but to create: “Most developers understand the need to put up buildings, and some understand the need to create spaces, but few understand how to make a new place.” Or as Sir Stuart himself puts it: “What we’re trying to do is invent.”

Broadgate won a string of awards, but all that commendation is nothing without a little bit of luck. “We used to say location was everything,” says Sir Stuart, “now we say ‘timing, timing, timing’.”

It was timing that ultimately lost him control of the City’s new centrepiece. It might sound an oddly anti-capitalist approach for a property developer, but Sir Stuart’s investment attitude over the past decade has largely been to look after the customer and let the finances look after themselves. That has meant steering clear of ownership and favouring more simplistic profit-share agreements with the client and its backers. Although at Chelsfield that cautious approach has been tempered slightly—Bernerd’s proven eye for a deal, and a team of private backers that includes HBOS Corporate chief Peter Cummings, has allowed Sir Stuart to at least reconsider acquisition and portfolio management—it hasn’t gone away; and its roots lie in the loss of Broadgate.

After the spending boom of the 1980s came a fierce property recession. Sir Stuart’s Stanhope and its partner, Rosehaugh, had begun work on the redevelopment of Ludgate Hill in the City. The project required a huge investment in improved infrastructure, including a kilometre of railway lines. But, says Sir Stuart, they missed the market. In 1992, “office margins crumbled, and with it the company folded at a huge loss,” he recalls. Rosehaugh went under and Sir Stuart lost the iconic, debt-laden Broadgate to Sir John Ritblat’s rival British Land for a paltry £3m. The experience shaped his approach to debt-heavy investment.

Nonetheless, he is still energised by risk: “It’s a risk business. If you don’t take risks you don’t get rewards.” Having lost a fortune, Sir Stuart set about winning it back. He picked up the Stanhope name, plus a few office furnishings, for £325,000, and promptly started again. The reinvigorated company enjoyed some significant successes, notably the Football Association’s Soho Square headquarters and the Treasury building in Whitehall. There was also the odd personal frustration: Paternoster Square, a controversial development project Sir Stuart chaired on behalf of the Mountleigh Group, succeeded only after a protracted, idealistic battle—with firebrand-in-chief Prince Charles famously demanding to know why the current fashion for “architectural idleness” meant we had “to be surrounded by buildings that look like machines”.

Stanhope also won the bid to redevelop King’s Cross—at the time, the largest urban regeneration project of its kind anywhere in Europe—but was forced to sell the rights after numerous planning delays. But the company’s resurrection was swift considering the severity of its fall. Sir Stuart was recognised for his contribution to London’s landscape with a knighthood in 2000, and became chairman of the influential Commission for Architecture and the Built Environment (Cabe), the government’s champion of good design. That he was forced to resign after five years in the post, following allegations of a conflict of interest, is one of the few blots on his CV.

Critics argued that too many—eight of 15—of the key decision-makers at Cabe had links with Lipton companies. A parliamentary report cleared Sir Stuart of any wrongdoing, but highlighted a “perception problem”. While Sir Stuart was chairman, records show that 11 Stanhope projects, including Stratford City, were put before Cabe’s commissioners. Sir Stuart insists that he was never responsible for reviewing projects—”I was the policy maker,” he says. “I never had a conflict of interest, because the rules that I set myself said that I would never be involved in reviewing design.”

Sir Stuart clearly regrets his untimely exit, but maintains that running Cabe was “a hugely enjoyable” experience, one which he says gave him a much broader view of modern planning requirements. Even now, he doesn’t pull his punches. “The planning authorities have systems that are so complex that the end result is not beauty. It is effectively the application of the lowest common denominator: it’s [a case of] ‘how do I comply?'”

We can get back on track, he insists, but we’re following the wrong model. His ire extends to the £9bn Thames Gateway scheme, a plan to build 160,000 much-needed new homes in the south east. Sir Stuart is concerned that these “cheap, isolated” estates will lack a sense of community. “The developing world has an opportunity to join with our house-building friends to build communities that reflect the age we live in rather than the past. We live in the age of Google and iPod; we build in the age of Romans.”

Building in the age of the Grosvenors would be a start.

By David Woodward

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