London-based First Penthouse is developing a new real estate market—the tops of other buildings.
When Swedish businessman Peo Lindholm and his wife Anne-Marie wanted a brand-spanking-new London penthouse, all they could find were draughty, old, dark boxes with leaky roofs and rattly plumbing. When they discovered a company prefabricating modern penthouses off-site and lifting them into place, they bought one off the plan. The result was a modern draft-proof new home. “We must be the only people [living in a penthouse] in London who are not afraid when it’s blowing and raining”, Peo Lindholm says.
The Lindholm’s apartment in St John’s Wood, overlooking Lord’s Cricket Ground, is the work of First Penthouse, a British company and the brainchild of Swedish civil engineers, Håkan and Annika Olssen. They’ve been dropping prefabricated penthouses onto buildings in upscale London suburbs of Knightsbridge, St. Johns Wood and Bankside for the last twelve years.
Everybody wants a penthouse pied-a-terre but, as with any top floor make-over, the building process can be arduous – as the Olssens discovered through their own traditional brick-by-painful-brick penthouse renovation. “No matter how sunny it is when you start, as soon as you take out a window, it always rains,” says Håkan Olssen, recalling the time when a quarter inch gap flooded the whole building. Dust, noise, ugly scaffolding and a continuous flow of workmen all make any rooftop addition a nightmare. From the rubble of their renovation they came up with the idea of combining the Swedish penchant for prefab and penthouses. They called the company First Penthouse.
Job transfers in 1989 saw the Olssens living in London: the ideal market place. They purchased aerial photographs of the city and started marking flat roof buildings with a red marker. “We knew we had a good business idea,” Håkan says, “when the whole photograph was red.”
Off site construction may seem obvious in hindsight but banks were less than enthusiastic. “No bank wanted to be first to invest because no one else was doing it,” he says. A close friend (and Swedish rag trade baron) stepped in, lending them 75% of the $400,000 start up capital for a 15% return.
The first project in 1984 at St John’s Wood Court was not without problems. A British company (which Håkan is too polite to name) took on the construction task. During the design stage, “They turned a three months job into a year long ordeal and when the penthouse was finally lifted into place it didn’t fit,” he laughs (luckily, it was nothing a quick exterior wall rebuild couldn’t fix).
The Olssens then took over the project themselves, moving construction to a succession of temperature controlled indoor factories (PEAB and Modulent) in Oslo. Because brutal winters make on-site building construction almost impossible, Swedish prefabricated building technology is amongst the best in the world.
To maintain their mission statement of “creating penthouses in prime locations, without disturbance” they developed a bespoke approach to prefab architecture. For instance the Olssens shipped century-old roofing tiles to Sweden to be incorporated into the new roof of their Albert Court development in London, a Grade II heritage-listed building opposite the Royal Albert Hall (initially deemed “inappropriate for the area” by Westminster Council, but approved on appeal).
In the case of Peo and Anne-Marie Lindholm’s penthouse, the Olssens upgraded the building’s amenities, including new water tanks, elevators, plumbing and roofing materials (a standard First Penthouse practice to increase floor space and placate existing tenants). To reduce noise hammer drills were banned (replacing them with silent diamond core drills like those used by MI5 to insert listening devices); hammers were replaced with rubber mallets; and a maximum team of five people (walking on thick sound absorbing rubber mats) completed the preparation work over four weeks. All the noisy construction was completed in Sweden where everything including whitegoods, wiring, doors, bathroom amenities and carpet were installed to the Lindholm’s specifications. When the roof site was finished a crane hoisted the new penthouse into place in seven hours. “If it was even a millimetre out they’d lift it again and reposition it”, Peo says. Hakan recalls it was actually half a millimetre but the five minute reposition saved hours of work for the decorator covering the joining seam between modules.
The refurbishment plus the halo effect of topping a building with a luxury penthouse can boost the value of existing apartments by as much as 20%. The best part: it costs existing owners absolutely nothing.
A 2000 square foot apartment typically costs between $1 million (a simple drop-off if the concrete roof, staircase and lift are already suitable) and $2 million (all this plus moving water tanks, aerials and air conditioning units on top of the new penthouse). The big variable is purchasing the building rights (or “air rights”) from the building owners, adding around $4 million to the price of the property. First Penthouse usually acts as developers selling completed or off the plan apartments.
Carol Thatcher (daughter of British ex Prime Minister Baroness Thatcher) was one of the rare jobs where the Olssens acted as contractors. She already owned the air rights and bought a small 300 square foot First Penthouse for just over $100,000.
To date, the Olssens have craned fifteen penthouses, from 300 to 4000 square feet, into place on top of heritage listed buildings; $50 million in sales all up. In spite of their success, the banks that back First Penthouse still don’t appreciate the term prefabricated. “They only lend money based on the real estate and site preparation, not the buildings themselves,” Håkan laments, adding, “It’s probably set us back about 4 years”.
But the Olssens aren’t deterred - their next stop is New York. Håkan estimates there’s at least a thousand suitable buildings in New York, worth up to $3 billion in First Penthouse sales. A site for a 2000 square foot penthouse has already been chosen for development in TriBeCa. The one day installation is tentatively slated for January 2006. While the first few are still likely to be shipped from Sweden, US production will see prefab penthouses joining the commute from New Jersey or Connecticut.
Do the Olssens occupy a precious piece of rooftop real estate themselves? They now live in rural Maidenhead, just west of London. “We’re keen horsemen and need to live in the country.”says Håkan. As yet they have no plans for roof top horse ranches.
Words by Adam McCulloch. Originally published in Business 2.0. The format has been altered to suit Tumblr.
