Lakhta Center – a large scale project of the construction of a modern business area in the north-west of Saint Petersburg. Opening in 2018.
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Saint Petersburg Needs a New Architectural Landmark

the Kommersant, No. 56, April 3, 2017

04.04.2017

Saint Petersburg Needs a New Architectural Landmark

In a year Gazprom Neft will complete the construction of the Lakhta Center skyscraper in the northern part of Saint Petersburg. The Russian monopolist is planning both to house the offices for its employees and to build a symbol of Saint Petersburg as a memorial city. Elena Ilyukhina, Director General of Lakhta Center Multifunctional Complex JSC (a subsidiary of Gazprom Neft), told the Kommersant about how the company managed to bring around those residents of the city who were originally vehemently opposed to the tower construction and what happened to the site on the Okhta river where the developer abandoned a major project following a dispute with historic site preservation activities.

The social and business quarter of the Lakhta Center is being built in the part of Saint Petersburg where work has been going on for quite some time now on the home stadium for Zenith Football Club.

I don’t want to make any comments about the stadium.

And yet, do you have any fears whatsoever that your facility may end up as yet another never ending construction project in the city?

Our construction works are completely on schedule. Our management system and the team that’s working on the project leave no doubt the construction project will be finished on time. We plan to complete the bulk of construction and installation in 2017. In other words, by the end of this year we’re going to see the building in the architectural form that was planned for it.

As for why some construction projects seem to take forever to complete? There are many reasons, really, oftentimes even day-to-day issues take a very long time to get approved, then there’s the unwillingness to assume responsibility for decisions and finally, there’s lack of clear financing schemes. In the case of the Lakhta Center, it’s been ordered and is being paid for by Gazprom Neft and thus it’s being treated the same as any other project of the oil company. This means that all the management and financial decisions are made competently and on time.

Ours is a business project and any delays can run up costs and that’s something we just can’t afford. So, rest assured, the Lakhta Center is going to get commissioned as planned, i.e. in 2018.

Back in 2014, a figure of RUB 76 bln in investments was mentioned, one year later, people were talking about RUB 96 bln. Isn’t that reminiscent of the situation with the stadium where the budget was also changed several times?

The figures you’re citing are expert estimates. We’ve never published any information about the cost of the project because it’s confidential, disclosing it could have a negative impact on its implementation.

How do you mean?

We hold biddings to choose contractors for each stage of the project. In this situation, we’re interested in having the potential contractors offer with the lowest possible price and that is best achieved when they have no idea about our financial plans. We want good quality of service for an adequate price.

And still it’s unclear why there are fears: bidding was held and Turkey’s Renaissance Construction was chosen as the general contractor, so why not let them sort out any disagreements now.

You have a rather simplistic idea about how construction projects work, especially ones that are as complex as our center. We cannot afford to be fully dependent on the general contractor. Instead, we’re entering into separate agreements for each stage of the project only after all the permits, approvals and working documentation are ready. This mechanism allows us to save up to 20% in costs on some agreements.

And how are the savings achieved?

Our working documentation is done to a very high level of detail and we’ve got very detailed cost estimates. It’s a good state of affairs for the general contractor too because they don’t need to hedge against the risk of incomplete project documentation, a situation that is quite common for big projects in our country. And for us, as the Employer’s service, having detailed working documentation allows keeping tabs on the prices offered by all the subcontractors, suppliers of construction materials and spare parts and that means we can avoid overpaying for construction and installation.

Has the crisis had an impact on the project costs? Have they gone up or down?

I can’t say we’ve benefited from the crisis but we haven’t exactly lost either. The system we build for entering into contracts that I has been telling you about served as a kind of a safety buffer. For some contracts we split ruble and foreign currency prices, which allowed us to effectively manage risks. Naturally, the fluctuations of the ruble exchange rates did affect the process, but not in a catastrophic way.

While Renaissance Construction is a company that was set up in Saint Petersburg in the 1990s, it was set up by Turkish businessmen. Last year because of the political scandal between Moscow and Ankara a moratorium was imposed on the use of Turkish manpower. How did that impact the progress of work on the Lakhta Center construction?

Work never stopped on our center because the general contract was executed prior to the imposition of the sanctions (the sanctions have since been lifted – the Kommersant).

The construction of the Lakhta Center met a mixed reaction both of historic site preservation organizations and some ordinary Saint Petersburg residents, and it shouldn’t have come as a surprise seeing how the 462-meter high skyscraper is going to drastically change the established physical space of Saint Petersburg. To what degree do you think the new building is going to be accepted as a new architectural landmark that is friendly to the surrounding urban environment?

The Lakhta Center is sited on the coast of the Gulf of Finland and is technically outside the boundaries of the urban area. It’s over 9 km from the city center, so there’ll be no negative impact from the skyscraper.

At the same time, the new neighborhoods of the city need their own architectural landmark stressing the polycentric development vector the metropolis is following. And that’s exactly the goal we’ve set to ourselves. We’re going to learn next year how the city’s residents will react to the new high rise. But we’re already seeing that the project’s been pretty much accepted by the younger generation: everyday people are posting selfies on social media with the tower under construction in the background, the new skyscraper’s already inspiring photographers and artists to embark on new projects.

Why was it decided to build a tower this tall?

Putting up a high rise was part of the original vision from the very start and there were several reasons for that. First of all, having a tall landmark against a flat horizontal background is a tradition in Saint Petersburg and now we believe it’s time to reach for new heights. We’re going to get a major landmark approaching the city from the north and seeing how it’s position on the coast of the Gulf of Finland, it’s also going to be seen from the sea. The tower’s dimensions were designed to match the lines of the Baltic coast and to fit in with the architecture of the pylons of the new cable bridge and the futuristic look of the stadium on the Krestovsky Island.

Secondly, in a high rise block, properties are arranged vertically and that reflects the principle around which the company is organized, plus it’s also reflective of our constant striving for future achievements. Third, height generally represents unlimited opportunities for growth. We’re talking about engineering, process and construction solutions, new construction regulations, unique buildings, unique experience and unique competencies.

Dozens of research institutions are taking part in the project as well as hundreds of contractors and subcontractors, each trying to deploy their own solutions on the project. After all for decades there was very little demand in our country for engineers and technicians.

How do you intend to make use of the existing historic landscape as you develop your complex?

There is no historic landscape around the new Lakhta Center. It’s on the outskirts of the city. On the one side, there are forests, fields and low rise buildings along the coast and on the other side there are new residential blocks that have been built there since the 1990s. And the site of the Lakhta Center itself is a raised area that was previously used as a sand storage facility. Everything’s being created from scratch, including the landscape and the new line of the sea-facing façade.

In this sense the site is optimal; it’s got potential for creating a new center of gravity with a view to future development. It’s a place where the northern Saint Petersburg will start. For us it was also important that all the big transport infrastructure development projects were approved prior to the decision to go ahead with the construction of our complex.

What this means is that once the Lakhta Center is completed, it’s going to give a huge impetus to the development of the coast of the Gulf of Finland, turning it into a modern urban space and encouraging the implementation of new recreational, cultural and tourist projects in the area. The adjacent territories are bound to evolve as well.

What makes you so sure?

It’s borne out by experience in other countries. In many European cities new neighborhoods have been created, featuring modern architecture and they co-exist in perfect harmony with historic heritage sites in those cities. Take Le Défense in Paris or the HafenCity in Hamburg, the Canary Wharf, the famous Gherkin building and now the Shard in London.

But there’s one powerful counterexample – Venice…

It’s true that Venice is one of the most beautiful cities in the world but it does not have any resources of its own for preservation or rejuvenation. It’s impossible to endlessly exploit the cultural heritage potential. Alternative paths of development are needed, included those that would allow the city to boost revenue so that the extra money can be spent on renovation and preservation of heritage sites. While Saint Petersburg has a large historic center, it needs fast economic growth to preserve its cultural heritage.

What makes you think the Lakhta Center is going to become a new urban driver for Saint Petersburg if the core of the business complex is going to house offices for 8,000 Gazprom Group employees?

Almost a third of the floor space will be devoted to public functions and the Lakhta Center is going to be involved in the urban life as a new landmark from day one. One result will be that the city will get a new publicly accessible observation deck, a modern planetarium, an open amphitheater facing the Gulf of Finland, a modern research and education center, infrastructure for water sports and comfortable embankments, in other words, the center will have everything that the city has lacked so far and for which there’s bound to be plenty of local demand and in this manner the new center will also be setting standards for new development projects in other territories.

In the context of the commercial real estate market of Saint Petersburg the Lakhta Center is a big project, it does not seem likely that at the height of the current crisis you’ll be able to lease out or sell even a portion of the floorspace…

We don’t plan to lease out any office spaces because all the offices will be occupied by Gazprom business units. Looking at the pace and scale of the move the companies of the Gazprom Group are undertaking, we don’t see we’ll be able to afford to lease out even the smallest portion of our office spaces.

As for the spaces for public functions and accompanying services, demand from potential operators already far exceeds what we can offer. Our job will be to pick and choose those who can offer really unorthodox and interesting formats.

In 2016, the government of Saint Petersburg said they were looking for a site in the city for another project whose total floor area would be three times that of the Lakhta Center. Don’t you think that could oversaturate the commercial real estate market in the city?

It’s been over six months since that statement was made and so far we’ve not heard any news about that project.

Lakhta metro station is to go into operation in 2025, what’s the state of its construction at the moment?

We and all the residents of the Primorsky District of Saint Petersburg (that’s where the Lakhta Center is being built – the Kommersant) are keeping a close eye on the city government’s plans and action with regards to extending the city’s rapid transit system into this fast growing and densely populated area of the city. I hope that the appearance in 2018 of such a large project as the Lakhta Center in this area will serve as an additional motivation for the government to proceed with the construction of the new metro line despite financial difficulties.

Naturally, though, it’s the FIFA World Cup that’s going to stimulate the development of the city’s transport infrastructure the most. The opening of Begovaya metro station is scheduled to occur before the World Cup and it’s going to be located a little over one kilometer from the Lakhta Center and that’s essentially a walking distance.

Last summer it was reported that the Federal Technical Supervision Service (Rostekhnadzor) found mass scale violations of fire safety during the construction of the Lakhta Center, apparently, none of the load bearing steel structures on the 30 levels of the tower completed so far were given adequate fire protection. Have you managed to eliminate those violations?

We had another inspection later, which confirmed there were no violations. Essentially, Rostekhnadzor found all those so called violations because there were no clearly defined fire safety rules for incomplete construction project and these problems were especially noticeable on our high rise and unique facility.

Applying a fire protection coating to steel structures is possible only if a number of important conditions are met: not only the steel structures themselves must be completed, but the concrete floors as well, the temperature must be at least plus 5 degrees Celsius. But the way our facility is being built is we first build the core, and then add steel structures, then we lay the concrete floors around the core and finally the façade panels are put in place. In other words, a fire protection coating can only be applied after some time passes after the steel structures are erected.

The existing regulations have nothing to say about that because they were written with traditional construction technologies in mind. In effect, Rostekhnadzor applied 20th century regulations to a 21st century building. So we developed and got approval for special technical conditions for this type of high tech construction projects and essentially, the way we’re carrying out construction on our tower has been made legal.

However, I would like to point out that we give safety top priority. This also applies to the solutions included in the design, to the way we’re organizing the construction process where we’ve got a whole bunch of cross checks in place to ensure adherence to all applicable regulations.

Gazprom and its business units have been actively buying up and renovating office spaces while the Lakhta Center has been built, specifically, buildings have been purchased and renovated on Ostrovsky Square, on Pochtampskaya and Galernaya streets, on Moskovsky Prospekt and in Paradny Quarter as well as in a number of other locations. How much money’s been spent on those acquisitions and how are they going to be used after the Lakhta Center opens?

You’d have to ask the respective Gazprom’s management units about that. I can only note that the future Lakhta Center will not meet all the demand for office spaces that Gazprom Group has in Saint Petersburg for all its subsidiaries; the number of people moving to Saint Petersburg far exceeds the amount of office spaces that we’ll be commissioning at the Lakhta Center. Real estate market analysts are showing no signs of distress of this.

By the way, at the peak of the latest crisis Saint Petersburg became practically the only city in the country where the commercial real estate market did not contract. To a large extent this happened because of what the professionals in the field have come to call the Gazprom factor. But it’s not just the city that’s reaping the benefits of this large scale corporate move. History teaches us that when a big company concentrates all its offices in a single place that has a lot of potential for real estate development, this leads to improved efficiency.

What happened to the land plots on the Okhta river where Gazprom originally planned to build its office center?

The land plots belong to the Gazprom Group but construction never started there. We’re willing to consider offers from the city’s government to exchange the plots for acceptable compensation for our costs.

 

The interview was conducted by Halil Aminov
Photo by Alexander Korykov




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