The EG Interview: Shaftesbury on 25 years of keeping cool in Carnaby

Take a tour of Carnaby Street and the surrounding W1 area with Shaftesbury executive director Simon Quayle and the trivia and anecdotes come quickly. One moment he is pointing out where Jimi Hendrix played his first London gig. The next he’s highlighting the store in which Stuart Trevor launched his All Saints brand with a small outlet in the 1990s. Then he’s remembering how music magazines NME and Smash Hits were once produced on opposite sides of Carnaby Street, their reporters hurling insults at each other over shoppers’ heads through the open windows. Quayle has good reason to be a walking encyclopaedia for Carnaby, as Shaftesbury calls the area. This year marks a quarter of a century since the FTSE 250 REIT added three Carnaby Street properties to its portfolio. Now the company owns most of the area, having bought property after property across 20 or so acquisitions. And Quayle has overseen the portfolio every step of the way. Carnaby has changed over that period. Shaftesbury’s team has worked to build back its reputation from the Swinging Sixties and underscore its standing as a hotbed of fashion and music – no small feat given how touristy much of the area was in the mid to late-1990s. “People talk about pop-ups now, but we started pop-ups 25 years ago,” says Quayle, looking out across Carnaby from the rooftop of Shaftesbury’s Ganton Street headquarters. “There was a place called Hyper Hyper on Kensington High Street, a market for young, aspirational brands. We used to go and speak to these people and say, ‘you can come to Carnaby Street, we’ll give you a little unit on a six-month licence and if it works, you [can] stay, if it doesn’t, you can move on.’” Now the area and the company face new challenges as the Covid-19 pandemic reshapes demand for retail space, restaurants and bars, and offices.  Oil under the street? Shaftesbury was founded in 1986, born from what Quayle calls “the ashes” of the Stock Conversion and Investment Trust. Quayle joined the team the following year – he had left Stock Conversion for a spell as an agent at Richard Ellis. Brian Bickell, now chief executive, was finance director. With a £15m portfolio of properties in London’s Chinatown, the company floated on the London Stock Exchange that year. Having built a nationwide portfolio, the financial crash of the 1990s saw Shaftesbury scale back to focus solely on the West End. In 1997 it paid £90m – some £20m over the asking price – for three blocks of Carnaby. Quayle recalls industry jokes that the company “must have found oil under the street”.  “But we had that conviction,” he adds. “We knew the West End and we knew this area.” Shaftesbury has since invested more on Carnaby Street and 13 surrounding streets. In 2021, the Carnaby portfolio was valued at £1.14bn, a drop of some 7% year-on-year as the pandemic hit prices.  “We filled in all the gaps, we’ve been very patient,” Quayle says. “The last building we bought was on Kingly Street, which we bought 18 months ago. There’s been 20 separate acquisitions… we take a long-term view and it’s all about long-term sustainable growth.” That Kingly Street acquisition was described in Shaftesbury’s 2020 annual results as a “dilapidated” property that the company “sought to acquire… ever since our purchase of the Carnaby Estate in 1997”. “We know every owner of every building that’s on our hit list,” Quayle says. Shoppers return On the mid-March day that EG tours the area with Quayle, the sun is shining and shoppers are out. Footfall is picking back up, Quayle says, although it’s yet to bounce back to 2019 levels. “Some of the new West End figures are showing that it’s probably anywhere between 10% and 18% down, but that’s without all the international tourists coming back – and they will start to come back again,” he says. In a February trading update, Bickell said the company has seen a “strong rebound in confidence” since last summer and that occupiers had been able to “weather this period of disruption” even given the emergence of the Omicron Covid-19 variant. Shaftesbury too has faced a challenging recovery. In the depths of the pandemic, the company raised more than £300m in new equity to shore up its balance sheet and allow it to support tenants struggling to pay rent. “We decided we wanted to support our tenants. During lockdown, there [were] some of the bigger retailers who paid a proportion of their rent, and much smaller and independent tenants that we didn’t charge rent if they couldn’t trade,” Quayle says, “What that meant is, when you come out of the pandemic, they’re still here.”   Office occupancy too is improving, he adds, and the company has been surprised by the continuing strength of demand for workspace in the area from creative industry tenants (and real estate firms – Quayle jokes that he thinks the latter have come for the pubs). The company has some 17,000 sq ft of office space at its mixed-use 72 Broadwick Street scheme under offer and is bringing forward the redevelopment of two of its Carnaby sites – on Carnaby Street and Kingly Street – to create an extra 27,000 sq ft of office space.  From tacky to trendy The offices are filling back up, but it will always be retail that Carnaby is known for. Samantha Bain-Mollison, Shaftesbury’s retail director, points to a “revival” from the “touristy, tacky shops” that defined much of the space when Shaftesbury first invested to its position as “a mecca for youth fashion again”.  “As soon as Shaftesbury purchased Carnaby, we recognised the responsibility of being guardian of such a culturally rich area, and the unique selling point of taking the tenant mix back to youth fashion,” she says. “One thing the pandemic demonstrated is that our approach to tenant mix selection has paid off – our stores tend to be either a brand’s only store, or a global, European or West End flagship. A lot of the time, a founder of an independent store will be based in the shop – as a purchaser you cannot find a more authentic experience than buying from the owner of a store.”  And in the food and beverage space, Shaftesbury has built out Kingly Court, an al fresco casual dining courtyard surrounded by eateries on multiple levels. Restaurant director Julia Wilkinson said upcoming openings from Nightjar, a late-night music venue, and Marsha, a restaurant and bar from Whyte & Brown, demonstrate “our aspiration to always add something new to the line-up”. More change ahead then, and more for Quayle to keep up with. He laughs as he recalls being told of the 25th anniversary of Shaftesbury’s first Carnaby purchase – it doesn’t seem possible for that amount of time to have flown by and for him to have witnessed the progress he’s seen in the area. As he waves through a shop window at another tenant or stops to talk to Shaftesbury colleagues, it’s clear that even as a Mancunian, this part of the capital has stolen his heart. As he puts it: “If you’re passionate about the West End and passionate about London, there’s no better job.”  To send feedback, e-mail tim.burke@eg.co.uk or tweet @_tim_burke or @EGPropertyNews Photo of Simon Quayle: David Parry; Julia Wilkinson: Paul Harmer; Other photos: StillLondon