PROPERTY WEEK, 24 MARCH 2006

Prop Idol

by Christine Eade

'I told you so,' bellows Pete Waterman, record producer and Pop Idol judge, in the direction of Daniel Mendoza, his property agent, with all the ebullience of someone who has been spotting winners for more than 30 years.

Waterman relishes being right. Has he given Mendoza, principal at Ereira Mendoza, a lead that he has followed for the letting of County Hall on the south bank of the Thames?

No, Waterman had predicted that Crash would win the Oscar for best picture. He sits in his office in County Hall, talking about the film with such passion, persuasion and unexpected introspection that anyone would want to cut short the interview and rush out to buy it on DVD.

But it is worth staying put to listen to Waterman, London's newest and most unconventional landlord, talk about his plans to find tenants for the remaining 300,000 sq ft (27,870 sq m) of County Hall. He moved the office of Pete Waterman Ltd (PWL) into the 1922 extravaganza of municipal pride just before Christmas, having relocated his recording studios from Borough High Street into County Hall three years before.

His offices are on the ground floor in what was once a crude bolt-on of space: it previously housed the GLC licensing department, in one of the inner courtyards of the 1m sq ft (92,900 sq m) building, where generations of motorists queued to buy their tax discs. Nowadays, the discs are gold and platinum, stretching down the long office as far as the eye can see.

The PWL office will illustrate to prospective tenants how County Hall can be transformed. Waterman, Mendoza and his partner David Ereira will create similar offices as show suites to market the County Hall Quarter.

It is a 'quarter' because that is the fashionable word for restoration projects. It is also represents 25% of the space in County Hall, which, amazingly, has remained derelict since 1986, when prime minster Margaret Thatcher legislated to axe Ken Livingstone's Greater London Council.

Ereira and Mendoza were at the MIPIM property conference in Cannes last week, giving out what they describe as 'teasers' about the 300,000 sq ft (27,870 sq m) of central London offices to let, which no one knows about. Although, as Ereira says: 'It is not easy to keep 300,000 sq ft a secret.'

The London Residuary Body sold County Hall to Japanese company Shirayama Shokusan for £70m in 1993. After substantial lettings of space for an aquarium and a couple of hotels, Shirayama granted a long lease on the empty space to a consortium of property developers, which brought in an accountant, Jit Chauhan, to let space to media companies.

Waterman arrived as a tenant in 2002 and joined the consortium. It soon became Cadogan Leisure Investments - unrelated to the Chelsea estate, but named after Susan Cadogan, the singer who gave Waterman his first hit in 1975. A few media companies signed up, and so it might have continued, if the accountant and the entrepreneur had not let the former banqueting rooms to Charles Saatchi for his modern art collection in 2003.

There ensued a fight more entertaining than anything Ken and Maggie ever managed. In October, the High Court evicted Saatchi for being in breach of his lease by, among other things, littering County Hall's common areas with modern art.

During the court proceedings, Waterman tried to act as peacemaker. Even today, he looks on the antics of his former tenant with wry amusement. Saatchi was fun - and Waterman wants County Hall to be all about fun.

'I thought Charles Saatchi was superb,' says Waterman generously. 'But we all have to have limitations in buildings. I came in one morning and thought I had kicked somebody lying in a sleeping bag. But it turned out to be a bronze sculpture worth £190,000. I really thought someone was sleeping in the corner.

'I said: "Charles, we have got to make this work. You can't put that in the corner, because it looks like a sleeping bag. We might get 16 refugees sleeping in the corner, and I won't know whether they are refugees or a work of art." I told him it was very clever, but he just had to keep all this in the gallery. It was just getting a bit silly.'

We walk round the stately, yet deserted, gallery, as staff lay red carpets and hang drapes as a setting for corporate entertainment for bankers.

Chauhan reveals: 'We are looking at using the gallery as exhibition or conference space, and we are in discussion with a number of people.'

On 8 March, the Saatchi company that owned the lease was wound up by the High Court, still owing Cadogan £1.8m. Waterman and Chauhan relish their reputations as tough landlords. Saatchi will reopen next year as a tenant of the more famous Cadogan Estate in the Duke of York's Barracks, off the King's Road.

Meanwhile, Waterman, Chauhan, Mendoza and Ereira begin their campaign to make the rest of County Hall habitable for creative people who play by the rules.

In June, Cadogan spent £3.5m installing a Teflon roof over the light well to the north-east of the GLC debating chamber. A bridge was constructed across the new atrium, and three wall-climber elevators were installed, as the building had been constructed without lifts.

Even before such improvements were made, Waterman had been leasing space to tenants with a manic determination that would put the most eager office agent to shame.

A good example is the letting to his friends at the British Phonographic Industry (BPI), the record industry's trade association, which moved into offices with a river view on the second floor of County Hall.

Waterman recalls: 'Their rent in Savile Row was going up £250,000 - and that's a lot of Brazil nuts. I called Jit and asked if there was any possibility of getting an office ready in time [before their rent review]. Most of the record boys are from west London, and don't like to travel across the Thames. But if you are going to save £250,000, the Thames doesn't seem that big, all of a sudden.'

Waterman organised a workforce, and told them: 'I don't care if you work 24 hours a day, this has got to be ready on time.' In the event, the BPI was able to take up its 25-year lease three weeks early.

But having saved the BPI £250,000, Waterman is reluctant to reveal the rent, or the rents that will be quoted when the rest of the building is converted into office suites. Ereira will only trial a marketing slogan by saying: 'Clerkenwell space without Clerkenwell rents.'

Waterman has a tenant's loathing of rent reviews. He has a fund of stories of creative types who say they will pay the rent when they are paid.

'What do landlords say?' he asks rhetorically. '"I'll see what I can get." Last year, the rent was £38,000. Next year, it is going to be £68,000. But how much does the Retail Prices Index go up? Two per cent?' The closest you can get to discovering a County Hall rent is that it will be linked to the Retail Prices Index.

Waterman's involvement in property goes back to buying his offices and recording studios in Borough High Street 30 years ago. Ereira Mendoza sold the building for redevelopment, and thus got itself reinstructed on the County Hall job.

How much did the company earn for its client? 'A lot. A bloody lot,' says Waterman, who still lives at the top of an old warehouse next door. He bought the loft apartment in 1986, when loft living was something that happened only in Manhattan.

It is a far cry from his first home: a council house in Coventry. As he walks through the former GLC offices that have now been stripped back to the brickwork, with all the partitions removed, Waterman muses: ‘I was born in a council house and now I am doing business in a council house.'

But there are similarities. Waterman took ironic satisfaction from the fact that the GLC chairman's dining room had the same wallpaper pattern - Mandarin ducks - that his mother was so proud of in their Coventry council house in 1957.

As he walks the stripped-back offices, he intones: 'There are nine and a half miles of parquet flooring in the GLC. Only the Ministry of Defence has more.' But later generations of London bureaucrats covered the parquet with tiles. Now, the stripped-back floors have a layer of stale adhesive and the parquet is just visible.

'A typical local authority,' says Waterman. 'They were probably afraid that someone would slip on the parquet.'

Ereira and Mendoza continues their marketing campaign by creating show suites, some with the reinstated parquet flooring, some with raised floors and carpets, in case the tenants want plenty of under-floor trunking.

They are approaching the unique instruction with optimism. Ereira says they could already have filled the space twice over if they had done deals with those who thought County Hall would make a good call centre.

They even turned down a doctor who thought County Hall was an appropriate place for a plastic surgery clinic.

It is tempting to say that surely they should take dull tenants such as lawyers and accountants, rather than insisting on a 'creatives-only policy.'

Surprisingly, Waterman agrees. 'We don't need one lawyer and one accountant,' he says. ‘We need two lawyers and two accountants. Then the people here have a choice.'

Sometimes, he curbs his enthusiasm and says this is just a hobby. After all, he will take part in Celebrity Pop Idol this summer, in a charity edition to raise money for the Prince's Trust.

County Hall has played its part in past Pop Idol shows, as the finalists stay in the County Hall Marriott. By the time Celebrity Pop Idol airs, the latest County Hall tenants may be signing leases. Central London offices, dead for 20 years, will be back in use, and there won't be a bronze sleeping bag getting in the way of all the creative activity.