JE ne regrette rien. That is the message from Chris Grigg when we discuss his decision to quit banking in 2008 to take the reins at commercial property giant British Land.
At the time, many in the City thought the former head of Barclays’ commercial bank was simply quitting one troubled industry for another; his first task on joining British Land was to launch a £740m rights issue and announce £1.64bn of writedowns.
But while bankers are still public bogeymen, the commercial property sector is out of the danger zone. As career changes go, it was a pretty shrewd one. No wonder Grigg, dressed in a pale blue shirt and striped tie, is so relaxed when we meet in his swish office near Marble Arch.
“I don’t wake up in the morning and wish I was a banker,” says Grigg, who spent 20 years at Goldman Sachs before moving to Barclays. “Why would I? I’ve got a very interesting job in an interesting industry – and I’m not subject to the attention of all and sundry for things which probably have nothing to do with me.”
Being the chief executive of one of Britain’s largest commercial property firms isn’t a job without its battles, however. Indeed, Grigg has just won one such fight against English Heritage, which wanted to award Grade II listed status to parts of the City’s Broadgate complex.
That would have scuppered the development of new offices for UBS, a lucrative project for British Land. Luckily for Grigg, culture secretary Jeremy Hunt intervened to quash English Heritage’s recommendation, thanks in part to a high-profile campaign in the pages of this newspaper.
Grigg is magnanimous in victory. “I have no reason to believe English Heritage was doing it for the sake of it. They took a view on the architectural merit – it was just different to ours.”
His conciliatory words can be partly explained by the fact the pair are likely to lock horns again in the not too distant future. Broadgate was the first of scores of 1980s buildings that could soon be eligible for listed status. “Because there was quite a big building boom around the City associated with the big bang, some of those buildings are coming to the age where they might be listed,” explains Grigg. “There is a view that it was a particular staging post in the evolution of modern office buildings in the City.”
Most of these offices were let on 20 or 25-year leases, which are almost up. That means they are likely to be demolished or redeveloped soon, guaranteeing the attention of English Heritage.
While Grigg says British Land will listen to “interested parties”, he is adamant that the office space on offer in London needs to change radically if the capital is to remain globally competitive. He says the biggest demand from would-be tenants is so-called “interconnectedness”, which lets firms change their office layouts with the ease of a “Meccano set”.
He cites a tenant in his Ropemaker Place development, which has knocked through its office to create a huge central staircase that doubles up as a theatre. “The chief executive can stand at the bottom of a ready-made auditorium in his own building. It’s a very smart idea, which I confess I wouldn’t have thought of; what we need to do is make the buildings flexible, so when you knock down a wall or move a column, the whole thing doesn’t fall down.”
That means London will need to build new office blocks, rather than developing older ones; the floor-plates in many of the capital’s buildings are simply too small for the kind of airy open-plan space that firms now ask for. “We’re seeing a big change. There will be several very high-rise buildings in the City, which will make it feel more like Manhattan than it did before,” predicts Grigg.
Grigg claims the right office can make a huge difference to a firm’s profitability. He points to Aegis, the advertising agency, which recently took one of British Land’s buildings at Regent’s Place. The firm, which has grown through acquisitions, was coming to the building from five separate, smaller buildings.
“I know some people who work there and they have been stunned by the change it has made to their business, adding to the bottom line and more than offsetting the increase in rent by an order of magnitude,” says Grigg.
This demand for a new type of office in part explains Grigg’s belief that London is facing a shortage of commercial space, which will push up rents in the capital. A lack of finance and strict planning rules will further exacerbate the situation, he says.
“If you’re going to start now with an unplanned building and take it through to completion, you’re looking at five years if you’re lucky, and more if you’re not. And there is very limited finance available for speculative developers other than the big property companies with existing revenue streams.”
Grigg says British Land is unlikely to agree any more pre-lets on its unfinished buildings in the near future. The firm signed a clutch of these with high-profile tenants at the end of last year, including insurer Aon, which is taking space at its Cheesegrater development, UBS at Broadgate, and Debenhams.
At the time, those pre-lets were good for confidence, especially as other buildings such as the Walbrook have struggled to find tenants, but Grigg thinks the firm can get higher rents in the long run by playing a waiting game.
He isn’t complacent about the threat of the Eurozone crisis to British Land, but he is more sanguine than other senior business people I’ve spoken to recently. “We continue to see values going up across our portfolio,” he says. “Investment banks are cutting staff, but remember they ran those numbers up very quickly in the immediate aftermath of the last crisis. Obviously a really big shock – the failure of a bank or an insurance company – would be bad for business, but that’s true for everyone in the world.”
London is particularly well-placed to weather the storm, he says. Its property market has become something of a safe-haven for investors looking to park their cash away from the Eurozone troubles. Even if there are fewer European buyers, there is “a very international crowd still buying, with a lot of far-eastern demand,” he says.
Grigg says the government, and specifically chancellor George Osborne, deserves credit for Britain’s safe-haven status, both in the bond and property markets. “The government got given a very tough hand of cards to play. Nobody wants to come in with very low growth, an inability to spend very much money and a need to ‘balance the books’”, he says.
“I think they have done a very good job in difficult circumstances, in particular maintaining and indeed increasing the sense of safe haven that the UK has. If you think about the alternative, if it felt more like Greece in terms of our capacity to deal with our own problems, that really does feel pretty scary.”
He is also broadly supportive of the government’s planning reforms, although he warns the localism agenda could encourage Nimbyism and says it should be easier for developers to turn retail units into residential space.
He reserves his strongest criticisms for those elements of the coalition that want to make London a less attractive city to live in. Although he picks his words carefully, he hits out at ministers who want to make it harder to live here by toughening up the visa system, and those who suggest wealthy people aren’t welcome.
“London has enormous advantages, from the currency and infrastructure to the time zone, language and expertise. But if you keep on chipping away at it, you’ll look back at some stage and say ‘that flipped’,” he says.
“All the evidence we have is that people want to come and live here. We continue to have a huge number of people who want to work here and to site their businesses here. But it is not a bottomless pit. If government goes on giving the impression that they don’t welcome people, that’s a dangerous road to go down – it’s a road we’ve gone further down than is comfortable.”
“Today we’re fine, but we have to be careful with politics.”
CV | CHRIS GRIGG
1981 Started his career in banking at Morgan Grenfell
1985 Moved to Goldman Sachs. Spent the next 20 years at the firm working principally in the capital markets and derivatives businesses. He rose to be a partner in the firm and held a broad range of leadership positions.
2006 Becomes Treasurer of Barclays Commercial Bank, the commercial arm of Barclays Bank
2007 Chief executive of Barclays Commercial
2009 Chief executive, British Land
Education: Graduated from Trinity Hall Cambridge with a first in economics
Home: Lives in Harpenden, Hertfordshire
Family: Married with five children
Hobbies: Southampton FC, rugby, cricket, skiing, military history