Soho’s small, old-fashioned buildings and narrow streets are owned piecemeal by myriad entities ranging from private individuals and small companies to public and semi-public bodies such as Westminster City Council and The Crown Estate.
The other notable owner is Paul Raymond’s legacy company, Soho Estates, but that doesn’t sell much and it is not the only one. Historically, development opportunities have been notoriously hard to come by.
That has changed as the area has shed its seedy image, however, with developers slowly piecing together land holdings allowing new development to occur. One such company is Shaftesbury, which acquired a retail and hotel scheme at 90-104 Berwick Street from PMB Holdings for £38.5m last week. It now owns 50% of the street’s shopfronts, having started buying properties there around 10 years ago.
The development of Crossrail, which will stop at Tottenham Court Road, has provided a further spur to investment and redevelopment.
So has a tipping point finally been reached in terms of the scale of development we are likely to witness in the area? Are traditional players finally becoming comfortable in once-seedy Soho?
The rise both in rents and investment values in the area would certainly suggest so. Soho Estates recently reported that the value of its portfolio had grown by 29.8% to £915.9m - although this was partly the result of being independently valued for the first time - and the average office rent has risen from around £77.50/sq ft to around to £95/sq ft in the past five years: a 22.5% increase.
Michael Pain, partner at Carter Jonas, says that the seeds of change were sown in 2009 when The Crown Estate embarked upon a redevelopment of its holdings in the south-east corner of Soho, known as The Quadrant. In a joint venture with Stanhope, it developed the 180,000 sq ft Air W1, a large office building of the kind previously unheard of in the area.
It attracted a new breed of tenants, including Generation Investment Management, which relocated there from Mayfair at a rent of £92.50 sq ft in 2011 - much higher than the then average of £75/sq ft.
Today, schemes such as Great Portland Estates’ 90,000 sq ft 30 Broadwick Street, which Pain says has been letting space at record Soho rents of £100/sq ft, are continuing that trend.
“Despite weakening demand across the London office market, that building has secured some of the highest rents ever achieved in Soho, which is quite remarkable,” he said.
“There have been a number of very upmarket hotels and restaurant groups that have moved in on the back of the quality of office occupiers, which is pushing property values up and attracting the interest of investors.”
Another example is Derwent’s 285,000 sq ft Soho Place, which will be built on the top of the Tottenham Court Road Crossrail station - a catalyst for much of Soho’s regeneration.
“Crossrail will transform the whole of Soho. It will allow employers to draw staff from a much wider area, which will lead to higher rental values and make it more lettable to larger employers,” says Steve Norris, chair of Soho Estates.
However, the varied ownership of Soho adds to its individuality, he argues. “There is a lot of investment coming in, but the challenge is to make sure we don’t turn Soho into an area that is indistinguishable from the rest of central London. It’s got to be quirky, fun and a little bit different,” he says.
One challenge for developers is that schemes that tamper with the unique character of the area or look to sanitise its colourful history often face a public backlash.
“We’re cleaning it up but I don’t think we’ll kill it,” says Norris of Soho Estates’ projects in the area, the most high profile of which is its mixed-use scheme at Walker’s Court - the former site of the Raymond Revuebar.
Similarly, a spokesperson for Shaftesbury says it will be looking to let the Berwick Street retail space to businesses with interesting, creative concepts to avoid it becoming “another boring high street”.
As the big players make ever-bigger plays in Soho, there is a very real danger this could happen. There are already worrying signs, says Pain. “Smaller industries like film and publishing are being pushed out of Soho and going to Shoreditch or Clerkenwell, and the principal reason is cost,” he notes.
The challenge will be to attract those that can afford to pay higher rents - without losing those that can’t but that make the area what it is.
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