Need for rethink at Blackfriars job blamed on high construction costs and rising interest rates
HOK has redesigned its plans for a City of London office block which has been stalled by high construction costs and rising interest rates.
The partial demolition and rebuild of Fleet House at 8-12 New Bridge Street near Blackfriars station was given the green light by City councillors in January last year.
But the scheme鈥檚 client Atenor Group has now submitted a fresh application aiming to address a series of viability issues which have arisen since the original consent by increasing the building鈥檚 amount of office space.
A report by Savills attached to the new application said it was 鈥渃lear that economic circumstances have worsened鈥� since Atenor purchased the site from the City of London Corporation in February 2022.
It blamed the viability issues on 鈥渟ignificant increases in construction costs, as well as increases in financing costs resulting from the rising interest rate which have limited the applicant鈥檚 ability to deliver the project鈥�.
Savills calculated that the developer would have lost 拢2.5m by building out the 2023 scheme and made only 拢1.3m by refurbishing the existing 1950s building on the site. It said Atenor would make around 拢5.5m through changes to the proposals submitted last week in the new application.
It said that while the new scheme still 鈥渄oes not meet a viable level鈥�, it reflects a 鈥渟ignificant improvement鈥� on the existing consented scheme which 鈥渆nables the Applicant to deliver the project鈥�.
The new plans are being billed as a 鈥榙eep retrofit鈥� and would retain 73% of the existing structure and add around 5,000 sq m of office space to the site.
The project team has been mostly kept intact and includes Core Five on costs, 3PM as project manager, AKT II as structural and civil engineer, Lichfields on planning, Hoare Lea as MEP and sustainability consultant and Velocity as transport consultant.
The 2023 plans replaced a former scheme designed by Pringle Brandon Perkins & Will for the City of London Corporation which was approved in 2015.
That scheme proposed the complete demolition of Fleet House and its replacement with an eight-storey building containing 7,000 sq m of office space.
The project team for the 2015 scheme included Gardiner & Theobald on costs, WSP as structural engineer and transport advisor, MEP and fire consultant Hoare Lea and townscape consultant Montagu Evans.
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