■London Estate Away Day - community
MAYFAIR AND ENVIRONS: THE WIDER IMPACT OF CROSSRAIL
Will Bax, Grosvenor June 2013
OUTLINE 5.40-6.00 MAYFAIR AND ENVIRONS: THE WIDER IMPACT OF CROSSRAIL Will Bax, Grosvenor
Mayfair is the luxury heart of the West End , containing the capital’s most exclusive shops, hotels, restaurants and clubs. Grosvenor is synonymous with Mayfair, both London’s largest landed-estate and the leading player in the West End’s luxury shop property markets. The new Crossrail station entrances serving Mayfair will be in Hanover Square, adjacent to Regent Street, and in Davies Street close to the existing Bond Street tube station. New office development is occurring above both new station entrances. Major area/stock renewal is planned for Hanover Square and New Bond Street. Will explores the ripple effect of luxury shop demand as upscale retailers seek space in the period Mayfair shopping stock and how Crossrail will boost shopper flows south of the new stations , strengthening existing pitches.
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Contents
■ Introduction to Grosvenor
■ VISION What we are trying to achieve at Grosvenor Britain & Ireland?
■ LONDON MARKET What is our view of the central London market?
■ STRATEGY How is our strategy responding to our vision?
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Grosvenor ■ An international property group:
■ Britain & Ireland
■ Americas
■ Continental Europe
■ Asia
■ London Estate: ■ 300 acres of Mayfair (100 acres) and Belgravia (200 acres)
■ £3.6bn (YE 2012)
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Grosvenor
Grosvenor’s origins are in the development and management of London’s largest estate dating back over 300 years
Mayfair and Belgravia came Started Australia business. Formally established Grosvenor into the Grosvenor family Fund Management ■ 1720’s Started Americas business. First international acquisition Started Asia business.
1677 1720 1953 1956 1967 1976 1994 1998 2005
First Joint Venture ■ 1820’s Development began Launched our Started Continental in Central London first Fund Europe business
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What are we trying to achieve at Vision Grosvenor Britain & Ireland?
■ Create inspiring places
■ Financially sustainable
■ Customer to be at the heart of our business
■ Focus on the way we do business to enhance our brand
■ Shift towards broader environment and social sustainability
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London What is our view of the London market Market over the mid term? Headwinds Positive Signs
Performance of the Global economy Stabilisation of the Eurozone - increasing remains weak risk appetite for assets
Weak Consumer spending – confidence Lack of supply of high quality assets remains low World leading educational facilities and Tightening Government spending reputation
Slow recovery in the financial markets Exchange rate and weak pound encouraging inward investment GDP growth expectations for 2013 flat Availability of equity and mezzanine finance remains strong Constrained development financing and mortgage availability SLOW GROWTH BUT Planning challenges – policy and resourcing OPPORTUNITIES
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ondon L What is our view of the London market Market over the mid term? Opportunities
COMMERCIAL (West End) RESIDENTIAL (London) RETAIL (West End)
Mid Term rental growth Cautious of continued Increasing demand for prime strong growth in prime units values Continued lack of supply of quality product Proliferation of luxury Overseas investment sphere remains strong – Floor plate size – 2,000 particularly far east Galleries – 5,000 Sqft
Rents subdued due to Period TOWNHOUSE slow corporate market but offering signs of improvement
Significant lack of housing across London
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How is our Strategy Strategy responding to our vision?
10 Year Plan
■ Significant re-investment across all Capital - £1.5bn sectors, underweight in retail ■ Leverage ownership to unlock 1.9m sq ft of new mixed opportunities – key to retail use product ■ Develop to HOLD to drive income and New Income - £105m / add value to build total return GDV - £2.5bn
■ Significant investment into public realm Public Realm/Art - £75m
■ Retrofitting upgrades to the standing portfolio to improve environmental Retrofitting - £50m performance
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On Estate Projects - Mayfair
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North Mayfair
Public Realm Beaumont Hotel Duke Street Brown Hart Gardens
5 star boutique hotel 16 prime rental apartments New public piazza with food offering 73 rooms 4 new retail units Partnership with Corbin & King
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Mayfair Office Core 29/37 Davies Street 65 Davies Street
37,000 sq ft offices Retail frontage Under construction Completion Q1/14 Project Ant
65,000 sq ft Start 2017
Retail led place making Public Realm transformation
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Mayfair Conectivity Little Grosvenor Street 50 Grosvenor Hill Silence
£5m investment 23,000 sq ft offices Tado Ando Architect Connecting Bond St to Mount St BREEAM Excellent Partnership with The Connaught 20 Grosvenor Hill Mount Street
20,000 sq ft Gallery £4m investment Page 13 Partnership with WCC
Mayfair’s Key Retail Streets
Page 14 Source: Grosvenor
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Grosvenor’s Retail Offer
Page 15 Source: Grosvenor
Crossrail – Driving Competition 65 Davies Street 2 (75,000 ft office development) ■ Approximately 155,000 passengers currently using Bond Street station daily 220,000 by 2018
■Quality and speed of journeys set to reinforce and increase demand for both office and retail space around Mayfair
■Accessibility grows footfall grows demand
■Mayfair luxury quarter anchored by Bond St
■Retailer demand and rent driven by “brand equity” model – £1050 psf ZA – impacts liquidity Improvements to journey times from Bond Street
journey time ■Spill over effect to adjacent streets – London Luxury Paddington 8 from Bond Street in 2018 Quarter Ilford 10 Savings in ■LLQ = £430m retail transactions (2011) Whitechapel 14 Jurney time between 2012 Ealing 15 and 2018 Broadway ■Identity
Abbey Wood 20
Heathrow 20
Maidenhead 31
0 10 20 30 40 50 60 70 time , min Page 16 Source: Crossrail, Grosvenor
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Crossrail – Driving Investment Expected commercial rental growth (2012-2021), % p.a. ■Crossrail has been a catalyst of new development and place making initiatives around the Bond Street station Office Retail 1.00% 5.0%
0.60% ■ 230 private residential units under construction within 4.0% 0.25% 0.25% 10min walking distance from the station (500 metres) 3.0% 2 2.0% ■ approval for 365,000 ft of retail, office and residential ( 2012-2021), % p.a. % ( 2012-2021), average rent growth average rent space directly above the ticket halls and more within 1.0% close proximity to Mayfair and north of Oxford Street 0.0% Mayfair Bond North of Bond Office Street Oxford Street Office Street Retail ■Grosvenor is working in partnership with Crossrail on the 75,000 ft 2 office development over the western ticket Expected residential value growth (2012-2021), % p.a. hall of Bond Street’s new Crossrail station
Residential ■Further 750,000 ft 2 of retail, office and residential 7.0% 1.0%, pipeline on Mayfair Estate 6.0% impact of Crossrail 5.0% ■Commercial rental values are expected to increase by 3.5% - 4.0% 5.0% p.a. surrounding Bond Station Crossrail. 0.5%- 1.0%
3.0% p.a. attributed to Crossrail (GVA) ( 2012-2021), % p.a. % (2012-2021), 2.0% ■Residential values forecast to growth by further 1% p.a. in average residential value growth value residential average 1.0% addition to the base line scenario over the Crossrail 0.0% Bond Street Residential construction
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Source: GVA, Knight Frank, Grosvenor
Public Engagement
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Creating the Conditions for Success
■ Accessibility – good transport links
■The importance of place – quality public realm
■People not cars – Prioritising the pedestrian
■ Asset Management – curating retail mix
■ Security – Safer streets
■ Governance – Vision, Integration, Devolution
Page 19 Source: NWEC, Grosvenor
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