Tenacity Group: From the ground up

Patrick Wong is anything but a passive property owner. Since acquiring his first building in London a little over two years ago, the founder and chief executive of Hong Kong-based Tenacity Group has flown to the UK once a month, mapping out redevelopment plans for the asset. Now on his latest visit, in a sunny but freezing cold December, Wong is finally ready to reveal those plans. Tenacity wants to transform 70 Gracechurch Street, EC3, into a building that “changes the dynamics” of the City of London.  [caption id="attachment_1010292" align="alignright" width="150"] Patrick Wong[/caption] The new plans, designed by Kohn Pedersen Fox Associates, propose a 33-storey (156m) tower providing around 600,000 sq ft of office and retail space with office floorplates of circa 23,000 sq ft, as well as a new passageway leading from Gracechurch Street into Leadenhall Market, one of London’s oldest markets.   And while the owners of many neighbouring buildings in the cluster of City towers appear to focus first on how their properties change the skyline, Wong is more concerned with the effect he can have on the ground. “From my experience people in London spend a lot of time on the skyline – what the shape is, how tall it is – but we don’t fly, we walk. We’re on the ground and I feel like the ground level is underappreciated, in the City especially. In my humble opinion, there could be a lot more to it.” Network effect Wong hopes the new 70 Gracechurch Street will contribute to the City of London Corporation’s aim to make the area a 24/7 economy, instead of the nearly deserted ghost town it becomes at the weekends, when all its businesses are shuttered up. “Before we bought this asset, at weekends I would see the City was half-empty, and those people that were visiting were walking around with nowhere to stop, and that’s a real shame,” Wong says. “This building allows me to help change those dynamics. That’s cool.” He wants the building to promote a more flexible working life for tenants’ employees. This, he hopes, will mean that if they come to the office at the weekend to work, they will have plenty of amenities to choose from and places to go during lunch, and tourists to the area will also have places to stop. “If we get this right, it will evolve the area so maybe the people inside Leadenhall Market will think differently about their whole business,” Wong says. “Hopefully, the offering in our building will also help leasing in other buildings. To me, that’s success. I don’t look at our buildings and think ‘fine, we’re good so screw everybody else’. It has to have a good network effect.” Once in a lifetime Wong, the son of billionaire Dah Sing Bank founder David Wong Shou-Yeh, started Tenacity in 2006 after working as portfolio manager for Trust Company of the West in the US, investing in growth businesses across a number of industries. “Having invested so much in growth businesses property, I don’t want to be in businesses that will obliterate us overnight without us knowing, so real estate is a good one,” he says of his decision to turn to real estate. “I decided I wanted to house these growth companies rather than compete or get rolled over by them.” Today, the company owns real estate in Hong Kong and Macau, and since buying 70 Gracechurch Street has also acquired a second London site, at nearby 55 Gracechurch Street. London attracted Wong because of factors including the UK’s transparent legal system, which he points out is “very important to money, to assets”. Wong settled on the City submarket after spending several years examining the capital and having his eye caught by the frequent additions to its tall tower cluster. “To have a site in that was something very intriguing,” he says. “The reality is that in the future there will be fewer and fewer sites that you can build a tower on [in London].” “From the moment we acquired the building we were already thinking about asset management options,” he says. “It’s a once-in-a-lifetime opportunity that you get to develop a building on top of a Roman forum in a financial centre like London.” Wong isn’t worried by Brexit, evidenced by Tenacity purchasing properties in London after 2016’s referendum vote, although he admits that he didn’t expect buying and developing to take so long. He believes that once the Brexit issue is settled and there is less economic and political uncertainty, the dynamism, talent and creativity of London mean businesses will flock to it once again for capital expenditure opportunities. “It’s logical,” he says. In the meantime, Wong himself is still getting to grips with developing in the UK, admitting that he has found London’s planning system slow going. “It’s a very different game here compared with Hong Kong,” he says. “In London, you need to look at millions of things. It’s an extensive and intensive exercise. Even if you had a site with nothing on it, it would take two years to get it up and running.” The pace is not deterring him, however, from embarking upon the development: “We sincerely hope that we can help be a catalyst for the City to evolve.” Tenacity’s portfolio London 70 Gracechurch Street A 214,000 sq ft property with six office floors and four retail floors, with Marks and Spencer as its anchor retail tenant. Acquired in October 2017 from Legal & General for £271m. According to Radius Data Exchange, most of the office leases expire in 2028. The building was built in 2002 on the site of the Roman forum of Londinium, with the remains still visible in the basement of a barber’s shop at the corner. 55 Gracechurch Street 75,000 sq ft of office space over nine floors. Acquired in August 2018 from DTZ Investors for more than £60m. The main tenant is Royal London Mutual Insurance Society. Hong Kong 299QRC, Queen’s Road Central Acquired the retail and office building located in Hong Kong’s Sheung Wan area in December 2018.  It comprises three podium retail floors and 20 office floors, and is where Tenacity’s own office is located. Macau The Callisto A residential development adjacent to the Macau Tower on the shores of Nam Van Lake. Plans, subject to city planning approval, include two 35-storey towers housing approximately 300 units and 11 three-storey townhouses, with a gross floor area totalling almost 600,000 sq ft. It will also feature a clubhouse with indoor infinity swimming pool, gym and spa.    To send feedback, e-mail louise.dransfield@egi.co.uk or tweet @DransfieldL or @estatesgazette