Heron Quays leaseholder addresses enquiry

By John Hill on November 12, 2009 9:21 AM |

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Heron Quays leaseholder Michael Gross will tell an enquiry this week that he was "deceived" by Canary Wharf Group during talks for his stake.

Mr Gross is one of two leaseholders who pushed for a public enquiry after they were served with a compulsory purchase order by Tower Hamlets Council last year.

The move was designed to allow CWG to proceed with the three-tower Heron Quays West development, a scheme it argues is "significant" for London's financial status.

A five-day public enquiry into the CPO resumed for its final two days yesterday (Wednesday), with Mr Gross giving evidence today.

The CPO was agreed last year after CWG claimed it had been unable to negotiate with leaseholders Mr Gross and Michael Hunt for their stake in 7 and 8 Heron Quays despite eight years of attempts. It argues Mr Gross and Mr Hunt asked for a £25million "ransom" each, while its highest bid was £5million each in late 2006.

In a statement seen by The Wharf, Mr Gross argues that CWG's chief executive George Iacobescu showed the pair plans back in 2006 that built around their sites, and had taken him "into a side room" to suggest he could do a "separate deal" excluding Mr Hunt. Mr Iacobescu denied this allegation in front of the enquiry last week, but admitted the scheme excluding the two sites was shown to demonstrate CWG was "not prepared to be held to ransom".

Mr Gross has accused Tower Hamlets Council of a "misuse" of its powers, prompted by the promise of a £5million endowment and £3million contribution to a replacement Skillsmatch training centre on site.

He argues that CWG should have outbid him for the site in 1999 had it wished to develop the land, and that the CPO is an attempt to "purchase the site for less than its true commercial value".

He said: "It is obvious that I have a deep concern that the acquiring authority, which in effect here is CWG, have not been negotiating with us openly and that this is part of their tactical approach to the CPO."

The enquiry has also heard evidence from figures such as office market specialist Allan Digby Flower, executive director of CB Richard Ellis, and chief executive of Centre for Economics and Business Research Douglas McWilliams.

Mr McWilliams argued that only three other potential "super trading" building sites existed in Docklands, at Millharbour, Wood Wharf and North Quay. He added there would be a "stigma" attached to Lehman's 25 Bank Street HQ which would "make it unacceptable" for potential tenants.