Thoroughly modern Marylebone

Remember 1999? Even vaguely? For most of the property industry, the era [caption id="attachment_831896" align="alignright" width="300"] Left to right: Oliver Fenn-Smith, Bill Moore and Simon LoomesPortrait: Will Bremridge[/caption] of Tony Blair, Boyzone and The Matrix probably feels like a lifetime ago. But when your company’s history dates back to the 16th century, it’s the blink of an eye. For the Portman Estate it was a very significant blink, because 1999 was the year the company reins were handed over to Christopher, 10th Viscount of Portman. Not only did he inherit the title, he also took control of a 110-acre London empire between Oxford Street, Edgware Road, Marylebone Road and Marylebone High Street. And what he did next has helped to bring about a renaissance in the area – an area that has since been transformed from a sleepy backwater into one of London’s bustling new districts. Marylebone has become something of a property hotspot, with the likes of British Land and Almacantar now in residence, and it is attracting some of the city’s hottest hospitality occupiers – including André Balazs’s celebrity favourite Chiltern Firehouse, Michelin-starred Italian Locanda Locatelli and the newest trendy kid on the block, the Zetter Townhouse, which opened this summer. So what’s next for the company fuelling the modernisation of this London village? Here the team behind the rejuvenated Portman Estate group talk firehouses, frontage and footfall. Taking back the blocks Back in 1999, the key strategy change for the company came from a new, hard-nosed business approach to the family firm. The viscount decided that an active management approach was required if the estate was to be maximised to its full potential. New trustees were appointed, a chief executive role was created and staff reshuffled. More recently the group’s workforce has expanded – by 20% over the past five years. The man who now holds that chief executive role, Bill Moore, describes the change as a “complete strategy shift”, and one that drove the firm into large-scale direct development for the first time. “[Christopher] had a very strong feeling for the guardianship and stewardship of the estate,” says Moore. “He brought in a chief executive and a chairman for the first time and they set about refurbishing. Now we’re in a much stronger position to go and deal with much more strategic projects”. But while great strides have been made already, you can’t build a district on a celebrity hang-out alone. There is still some way to go and the continuation of the Marylebone rejuvenation remains top of the team’s list of priorities. They have taken back control of the long leaseholds that have historically been sold off. This is with a view to updating the building stock, upgrading the public realm and creating a more coherent, quality retail offer in the footsteps of the adjacent Howard de Walden estate. About £50m has been allocated to buy back leases, with a further £220m set aside for refurbishment projects over the next seven years. Property director Oliver Fenn-Smith says the programme is only half complete, with around 50% of the 280 retail outlets still let out on long leases. “We want to control the retail frontages directly again, so we can influence the mix and character of the area. Some of the retailers, say in Baker Street perhaps, haven’t been ones we would have necessarily chosen if we were starting off from scratch. It’s a high-quality retail environment, the building stock is high quality, and things like the [Chiltern] Firehouse are having a positive impact on the area. But it’s still a place in transition.” Modern Marylebone The transition is moving on rapidly, with much of the estate unrecognisable, compared with 15 years ago. British Land completed its 134,000 sq ft headquarters at 10 Portman Square, W1, in partnership with the estate in 2013. Then, in 2014, the estate struck a deal to take full control of the vacant 70,000 sq ft Marylebone Police Station, W7, and is planning a residential-led development valued at as much as £150m – the first of that scale and ambition in the estate’s long history. Elsewhere in the area Almacantar’s £450m Marble Arch Tower, W1, has been approved and will replace an ageing 1960s building with an 18-storey resi tower and seven-storey office block. The changes have transformed Marylebone’s occupier profile. As well as Almacantar, Colliers International, Knight Frank, Nash Bond and Cushman & Wakefield have flocked to the area, and while on the retail and leisure side the estate still sits in the shadow of Bond Street, “the Chiltern effect” [see box] is adding some much-needed gloss. Fenn-Smith thinks the improvements already made, combined with its comparative affordability, are turning Marylebone into a new competitor for the most prestigious office and residential occupiers from areas such as Mayfair and St John’s Wood. Though headline rents have doubled in recent years to around £70 per sq ft, with £80 per sq ft being achieved on the Edgware Road, Marylebone still represents a sizeable discount for the Mayfair occupier the area is attracting. “In Marble Arch Tower and 10 Portman Square about 50% of the occupiers are financial services. That’s quite a change,” Fenn-Smith says. “Until the big redevelopments here, all that was on offer were period buildings. Now we can offer modern blocks with sizeable floorplates.” But before the area can truly hold a candle to its more-established London rivals, the leadership says it must sort out its transport infrastructure. Strategic projects director Simon Loomes says: “Our first issue is to try and stop national through-traffic from using Marylebone. At the moment Baker Street and Gloucester Place are marred by that.” Transport for London has offered £10m of funding for the Baker Street Two-Way Project, now out to consultation, which will see the pavements widened. The Portman Estate sees this as central to its project. Once this is done, Oxford Street West and Marble Arch will become the target of a drive to boost the area’s civic environment, with a bid to create a Marble Arch BID expected to be under way by next year. “The residents and the commuters use the streets on a day-to-day basis. We ought to make them a lot more civilised for those people,” says Loomes. “At the moment it is difficult to hold a conversation on Baker Street. If you run a café and you want people to sit outside, it’s a hostile environment. If you make the streets better, the footfall will get better and the retail will respond to that.” Elsewhere, the Portman Estate has plans to capitalise on the “huge potential” of the retail at the western end of Oxford Street, to counter the substantial regeneration being enjoyed at the eastern end of the thoroughfare. It also plans to extend the street’s business one block to the west. The consented Marble Arch Tower is expected to start in summer 2016, once the estate has restructured the lease – which expires in 2029 – to make the scheme viable for Almacantar. The estate is then planning its own refurbishment of the circa 60,000 sq ft of offices and 20,000 sq ft of shops at Marble Arch from around 2017. Estate life As for the longer-term plans, while the group’s focus on London leaves the estate more dependent on the fortunes of the capital’s occupational market, the Portman team says its estate model means it is less vulnerable to capital value fluctuations than the young pretender estates owners at King’s Cross, Nine Elms, Paddington, Stratford and Victoria. Moore also thinks the family ownership model allows tenants to be better cared for, while improving the public realm through a longer-term asset management strategy. “Some of the newer estates haven’t quite yet got the professional landlord services element to retain their customers,” he says. “That’s where we still have an advantage and we intend to maintain that.” On the other hand, the long-leasehold structure has prevented the estate from fully capitalising on its privileged geographical position in recent years, as the market around it smartened up significantly in recent decades. So is the western end of Oxford Street about to see a new challenger for its business, in the form of Marble Arch and the Edgware Road? It will take some doing. But one thing is certain: if the estate becomes a serious contender for the best office and retail requirements, it will be in it for the long haul.   The Chiltern effect In February last year the decommissioned 19th-century fire station in the heart of Marylebone was given a multi-million-pound makeover. The Chiltern Firehouse swiftly became London’s new celebrity mecca. The opening marked the first foray into the UK market by André Balazs, the man behind Chateau Marmont in Los Angeles and The Mercer in New York. The opening of the five-star hotel and restaurant was significant for the area – firmly putting it on the London map, as celebrities including Kate Moss, Rita Ora and David Beckham flocked to get in on the action. And as other hospitality businesses, including the Zetter Townhouse, have swiftly followed suit, a wave of trendy occupiers looks set to ensure that Marylebone’s days as a sleepy backwater are well and truly in the past. And that can only be a good thing for the developers and landlords, such as the Portman Estate, looking to elevate the district to new heights.