Commercial Property Blog
Clintons: Shoplifters of the world unite!
Clintons: Shoplifters of the world unite
The Smiths song ‘Unhappy Birthday’ opened with the lyrics: “I’ve come to wish you an unhappy birthday / Because you’re evil and you lie / And if you should die / I may be rather sad, but I won’t cry.”
That was how most people felt when Clintons finally folded yesterday.
The 44-year-old retailer - named after founder Don Lewin’s son, Clinton - was as much a part of Britain’s social fabric as Kenny Dalglish and Maggie Thatcher. Like Morrissey, they all enjoyed their peak periods in the eighties. (And are seemingly also living in denial for some time as well.)
But while King Kenny is still fondly remembered by the Reds as Thatcher is by the Blues, the nation’s favourite card store seems to have folded with all the joyful whoops rusually reserved for the kind of tabloid-drubbing dished out to Rebekah Brooks.
Perhaps it was because this – more than any previous administration – had been such a long time coming. There wasn’t a landlord, investor or journalist who hadn’t seen the crows circling since Birthdays was put into administration three years ago, almost to the day.
What was almost as amazing, was the hilarious spin machine put into action (probably by the administrators’ PRs) that placed rumours that WHSmith was apparently “considering” a bid for Clintons. Having successfully pulled rabbits out of hats year after year, Kate Swann, on what must surely be a similar knife-edge of dwindling consumer demand, would surely be nuts to take on more high street exposure?
It was what Clintons did when it splashed out over £46m on Birthdays in 2004, let us not forget, in spite of the internet clearly starting to hit traditional postal greetings. When Clintons put the firm into administration just five years later, the writing was on the wall with a giant great bunny stapled to the front.
And while this went on, with debts being run up all over the show, why was no restructuring put in place then?
Some have criticised the banks for displaying this same lack of ‘moral responsibility’ pulling funding. Indeed, there’s a large dose of irony seeing the slivery George Osborne bang on about supporting British firms while our State-backed banks fund private equity groups as they asset-strip once successful businesses, having pulled the rug from the principle company executives.
But when your shareholders are the public and the retailer is so clearly buried, it’s a hard for one to argue.
Of course, the major problem was Clintons’ paying over the odds for plump spots on the high street – something American Greetings clearly needed to fix when it bought the company and subsequently called in its debts. And with other firms teetering on the edge over the summer, the rebasing of high street rental values could continue for some time.
At the end of the day, successful enterprise comes down to the balance of risks. The current insolvency epidemic swings that too far in one direction. A large creditor higher up the food chain may get a few million pounds, while SME unsecured creditors will be lucky to get paid anything. The hit for them will be far worse as a result.
If no one can trust anyone to pay, that itself undermines the very enterprise we keep telling ourselves will get us out of recession. If we’re serious, maybe we need to change the record on insolvency regulation?
My marathon week
With a countdown of just 72 days to the London Olympics, my week has been something of a marathon.
Still not quite in the Olympic spirit? Then I suggest seeing Chariots of Fire just opened at Hampstead Theatre which as you will know from the film of that name is based on the 1924 Olympics.
This inspiring and energetic production prompted a standing ovation and outpouring of a patriotic rendition of Jerusalem. It's well worth going to limber up for our Olympic summer.
I also paddled round (in the rain) the newly completed development at the wonderful Regents Park Open Air Theatre paid made possible by the fund raising efforts of the development committee, of which I was a member, chaired by Savills' Rupert Sebag-Montefiore.
For a truly magical and quintessentially English experience book now as the new season starts shortly and includes Midsummer Night's Dream. I'm told we will have a summer…. eventually!
This week's British Property Federation annual conference 'The road to 2020' was well attended and once again ably chaired by the BBC Today Programme's Sarah Montague who has become a popular fixture on the property circuit.
She was joined by after lunch speaker, BBC Economics editor Stephanie Flanders who it has to be said made some fairly dampening comments on the economy.
But on a slightly positive note, she felt that property can be part of the solution to UK economic crisis.
She pointed out that in 1934 the private sector built its way out of recession with 293,000 new homes (about triple last year's output). Underlining the extent of world turmoil she pointed out that a whopping 40% of world GDP is changing hands politically this year.
Looking on the 'glass half full' side in response to the inevitable question of when will the economic crisis end, she gamely opined that if we never get out of it we won't notice as this will become the new normality.
And will the euro survive? 'Yes but it won't necessarily work!' The panel sessions which produced some interesting conversations were controlled by Sarah Montague with her usual aplomb referring in passing to the property sector's 'tortured' relationship with the banks.
For light relief the week did contain a number of dinners, one in a particularly buzzy Mayfair restaurant where we had the unexpected bonus of being seated at the next table to the glamorous Gwyneth Paltrow and her musician husband.
I am pleased to report that one of our group Harvey Soning sprung into impressively chivalrous action to return Ms Paltrow's serviette within a nanosecond of it dropping to the floor. I'd like to think I'd get the same response.
During the week I was taken round the Kings Cross redevelopment (also in the rain but even the weather didn't detract from the experience).
This was my first visit since the early days of the original King's Cross Partnership think tank when our blue-sky thinking envisaged such revolutionary concepts as 24/7 shopping.
The forward to 'Stories' a beautifully illustrated book about the history and transformation of King's Cross starts 'Cities are made of stories and storeys.'
It is great to see the vision unfolding with the unique blend of heritage and award winning new buildings.
The 67 acre development provides 8 million square feet of mixed use space to include 2000 new homes and 40% of land will be open space.
Central St Martins are now well ensconced in their brand new home and the artistically attired students provide a colourful addition to the urban landscape.
In fact we are missing them in Holborn, their former home. And I never thought I would enthuse about a station but it has to be said that the revamped Kings Cross station with its John McAslan designed canopy is extremely impressive.
Although requiring a 7.30am start, the Jewish Care Property Investment Breakfast at the Dorchester Hotel was well worth the effort.
The guest speaker, Lord Alan Sugar, definitely didn't disappoint in a sparkling Q&A session chaired by property doyen, Philip Lewis.
Sugar described Twitter as 'a great tool but you have to know how to use it'. I don't disagree and it has to be said that he employs it very well.
He claimed not to know much about property which he dismissed as 'pretty boring' and 'not rocket science' although I'm not sure the audience were totally convinced.
And do you want to know what drives him personally? Unquestionably it's new technology and innovation.
He also made a telling point about the Americans being generally more positive in their outlook. He's noticed that they say things are better and eventually convince themselves that they are.
The power of positive thought! Maybe we can use it to improve the weather.
To end on the Olympic theme, Lord Sugar sees the Olympics as 'good for Britain' although that’s not to say he's going to venture out during the Games as he says he'd rather stay home and watch 'on the telly.'
Jet-lagged but joy-full of Australian wine
I returned from holiday the week before last jet-lagged but satisfied having visited a number of Australia’s most prestigious wine regions.
The Barossa Valley stood out because of the number of great estates that I was able to fit into a single day. These included, among others, Penfolds, Henschke, Two Hands and Torbreck.
Penfolds and Henschke are, of course, famous for the iconic 100% Shiraz wines Grange (2006 - £220) and Hill of Grace (2006 - £370).
Sadly, however, neither wine was offered for tasting which was a pity considering that I had travelled almost 10,000 miles to visit their respective producers.
Two Hands’ highlights included an interesting Moscato called Don’t Tell Richard (2011 - £13.00) and their flagship wine Ares, a Barossa Valley/McClaren Vale Shiraz (2008 - £95.00).
The tasting area was by far the most hospitable of the trip comprising a teak deck overlooking the vineyards with an outdoor wood-fired pizza oven in situ to provide a welcome companion to Two Hands’ wines.
Torbreck’s founder David Powell named the estate after a forest in Inverness where he worked as a lumberjack and followed a similar train of thought with the wines, the majority of which also have Scottish-influenced names.
The notable exception is an unoaked Grenache Shiraz Mourvedre blend Cuvee Juveniles, which is named after Englishman Tim Johnston’s wine bar in Paris.
The standout wine Runrig (2007 - £110.00) was superb: rich dark purple colour; black fruit and sweet spice on the nose; hints of dark chocolate on the palate; silky tannins; and a long finish. This could undoubtedly be enjoyed 20 years hence but could equally be drunk today if you prefer your wines younger. More affordable offerings include The Steading (2006 - £35.00) and The Struie (2007 - £45.00) and interestingly Fortnum and Mason’s Barossa Valley Shiraz (2009 - £14.90) which is made for them by Torbreck.
Coonawarra will be remembered more for a £200 speeding ticket that I received on the John Riddoch Highway than for wine though I enjoyed visiting Yalumba.
The Yarra Valley will be remembered for Yarra Yering. Yarra Yarra Dry Red Wine No.1 (2004 - £51.00) has to be one of the most undervalued Bordeaux blends available comprising Cabernet Sauvignon, Merlot, Malbec and importantly the highly tannic Petit Verdot. Dry Red No.1 is deceptive as if tasted blind a taster could be forgiven for identifying it as a classified growth from Bordeaux rather than as a New World blend. Yarra Yering Dry No.2 (2006 - £50.00) a classic Shiraz/Viognier blend also stood out though it was hard not to be influenced by the view from the glass fronted tasting room over the Yarra Valley as I evaluated the contents of my Riedel glass.
I would recommend anyone visiting Australia to take the time to visit several of its wine regions as in addition to wine there is a lot to see and do though you should of course remember the speed limit as your money is better spent at the cellar door than with South Australia’s police.
Can’t pay? Apparently, there’s no need to!
Can’t pay? Apparently, there’s no need to!
The Supreme Court recently ruled against the Hounslow Council and its attempt to evict a tenant for rent arrears. The court found the council fell foul of the European Convention of Human Rights’ Article 8, which is to respect for someone’s home, and to my mind this has left a barn door open for challenges to the private rented sector and opportunities for miscreant renters.
Sometimes a decision arises that leaves one thinking how and why? How is society funding, presumably through legal aid, for those who don’t want to play their part and abide by basic terms of a contract. If these types of individuals do pay their legal fees, why don’t they just pay the rent arrears, or indeed, the rent on time?
One can look around a lot of areas and think how did these positions arise? Surely nothing is more simple than someone signing up to rent a property and, if they don’t meet the basic term of actually paying the rent, surely the landlord should be able to protect their own investment, property and livelihood. This applies to councils and social landlords as well as private rented sector.
What does it take to restore balance from the quirks of decisions that ride rough shod over the natural justice and what most would see as common sense.
Hopefully, somewhere down the line another case will restore the natural balance and justice but it will take either a lot more legal aid and a council or private landlord incurring huge legal fees to achieve it.
Surely the Government should step in to clear up these anomalies and abuses of what the Human Rights conventions were intended for.
‘France versus the New World’
Mark Lewin of IFG International Limited invited me to join him at Berry Bros. & Rudd, 3 St James’s Street for an evening entitled ‘France versus the New World.’
The Napoleon Cellar is a particularly appropriate venue for such an occasion as it was here that Louis-Napoléon Bonaparte, as Napoleon III, founded the Deuxième Empire in 1851. It remained to be seen whether France would prevail this time around on the battleground generously provided by IFG.
I started with a white Burgundy: 2009 Mâcon-Cruzille, Clos des Vignes du Maynes, Soufrandière, Bret Bros. (£24.50). Plenty of oak on the nose, balanced with a good dose of citrus fruit and acidity on the palate; but, overall a touch one-dimensional. I preferred the less expensive Australian 2008 Toolangi Vineyards, Estate Chardonnay, Yarra Valley, Victoria (£18.50) as it offered a richer range of ripe fruit on the nose and palate. In addition, the oak was far less dominant adding complexity and length rather than overpowering the wine as with the Mâcon-Cruzille making it an easy call to give the New World its first point.
Pinot Noir was far closer. I expected 2007 Nuits-St. Georges, Clos de la Maréchale, 1er Cru, Domaine Mugnier (£49.00) to walk it: buckets of red fruit on the nose; floral characteristics on the palate; good weight; firm tannins; and a good length. I really enjoyed drinking this wine with several of the spicier canapés. The 2008 Mountford Estate Pinot Noir, Waipara (£38.95) was, however, not going to concede without a fight: intense ripe red fruit; impressive structure; silky tannins; acidity; and length. The Mountford Estate was declared the winner; first, on the basis of value for money, and secondly the fact that it could be enjoyed more easily without food making it 2-0 to the New World.
The playing field was far from level for the final round: Bordeaux blends. Australia’s 2007 Yarra Yering Dry Red No.1., Yarra Valley, Victoria (£51.00) did not stand a chance against a mature Bordeaux Second Growth from a legendary vintage: 1996 Ch. Gruaud Larose, 2ème Cru Classé, St. Julien (£118.00). As much as I love Yarra Yering, having taken delivery the same day of a case of 2005, bought through Berry’s online brokerage platform BBX, the density of black fruit, liquorice, tobacco and sweet spice flavours of the Gruaud Larose prevailed.
The final result 2-1 might appear to favour the New World; however, the French, as ever, have a joker to play. As all of the New World wines are aged in French oak a rebalancing of the scores would seem to be fair; suggesting a score draw as a more politic conclusion. Louis-Napoléon Bonaparte would, no doubt have, approved.
Green refurbs and fit-outs can be achieved with a bit of help from Ska
Many of the larger UK retailers are taking sustainability very seriously, but until now the sector has struggled to find a way of measuring the environmental impact of fit-out or refurbishment.
This is a serious blind spot for an industry where growth is enabled via taking space in existing buildings or shopping centres or expanding existing units, rather than building new stores. Indeed, an estimated 11% of total UK construction spending is on fit-out and buildings may have 30 to 40 fit-outs during their lifetime.
In addition, as retail’s outlook remains bleak, cost drivers are key, and sustainability is being approached as a means of delivering efficiencies, as well as enhancing CSR. Whatever the incentive, this is positive. With 18% of the UK’s carbon emissions coming from the existing stock of non-domestic buildings, a major battle in the drive to achieve a more sustainable retail industry needs to be greening the retail space itself.
RICS’ Ska Rating for Retail enables retailers, retail banks and restaurant owners to balance business realities with the need to improve environmental performance.
Based on the offices version of Ska Rating, launched in 2009, the retail methodology gives retailers demonstrable evidence of their green credentials. With several hundred projects registered for assessment, the methodology is now being used to address the unique challenges and opportunities of fit out and refurbishment projects run by retailers, banks and restaurants.
Created with a team of development partners including Whitbread, Royal Bank of Scotland, Green Room Retail, ISG, AECOM, the Association of Interiors Specialists and the National Association of Shopfitters, the tool rates the environmental impact of the fit-out against a series of good practice measures regardless of the base building. Ska embraces energy consumption, CO2 emissions, waste, water, material use and wellbeing to award a gold, silver or bronze rating.
Pilot projects have been successfully completed at Lush in Birmingham and Newcastle, Wahaca at Bluewater Shopping Centre and Nationwide Building Society on Oxford High Street. All the projects realised quantifiable efficiencies, with pilot teams reporting that the Ska Rating has helped them across a broad spectrum, enabling employee engagement in sustainability, the strengthening of brand image and achievement of substantial savings in both financial and environmental terms. Projects reported the diversion of an average 80% of waste from landfill, use of recycled materials and 30% reduction in energy use, all of which translate directly into savings for the retailers’ bottom lines.
As the assessment system continues to be rolled out and adopted across the retail sector, we anticipate a better balancing of business realities with the need to improve environmental performance, as well as an improved ability to benchmark the environmental performance of a sector worth over £5bn last year alone.
To get involved, and for more information,visit www.rics.org/ska or email ska@rics.org
Tim Robinson is Director of Information Products Group at RICS
Green awards for incomplete buildings: no wonder people are cynical about sustainability
Last weekend marked the start of the new Formula 1 season, with a host of complicated new rules no one understands along with the promise of - wait for it - ‘greener’ engines. Whether you’re nuts about F1 or would rather chew your own elbows off through boredom, you’d be hard-pressed to make any kind of environmental case for its existence. Everything about F1 is indulgence: from the fanfare of cheerleaders and luxury motorhomes, through to the fact this whole travelling circus now takes in a whopping 20 cities.
Munchkin F1 billionaire Bernie Ecclestone – tipped to float F1 in Singapore shortly – is a very clever man though. And with cigarette sponsorship stubbed out across the board, he’s clicked that a bit of fuel recovery here and slightly less powerful engines there can dress up F1 to a new bunch of sponsors. Making. Him. More. Money.
What’s rather ironic here is that the world’s un-greenest sport can find a way to make sustainability work, yet an industry responsible for half of the country’s emissions cannot. Not en masse, at least. And despite whatever bluster we get from agents who “realize the importance of green buildings” but can’t “put an exact figure on“, the reality is as PW’s Green Issue showed: lenders take a three-to-five year view and sustainability doesn’t figure.
Moves by Land Securities, Quintain, Legal & General and others are highly commendable and I know from personal experience how committed their respective chiefs are with reforming the sector. But what about those individually-owned shops and sheds across the land that don’t have the cash to hire Drivers Jonas Deloitte to come and run a green audit then refurbish the place?
One of the main reasons for investors and people generally paying “lip service” to sustainability (as Mike Philips succinctly put it in his column) is because many of the ratings and grades we have bear little resemblance to reality. Take the BRE certificates: they’re often based on nothing more than designs, or work in progress constructions. Does anyone remember when Lewis Hamilton won the world championship in 2008 and everyone said he’d win everything? How many has he won since? None.
One great example is LSE’s new £24m students centre on Sheffield Street, WC2, which it proudly boasts has been given a BREEAM rating of ‘outstanding’. Julian Robinson, LSE’s director of estates at LSE, gushes how delighted he is about having the ‘greenest’ ever building, before the press release says that construction won’t actually finish until next year. Maybe I’m being simple, but how can you actually measure the true ‘greenness’ of a building until a) it’s finished and b) it’s occupied?
Just as this advance praise indubitably hinders sportsmen who need to grow into their own futures, similarly, all this show-boating around green buildings that haven’t been built is, I dare say, one of the components that drives some of the mass cynicism around sustainability. As Francis Salway has said, and as I have written repeatedly over the years, it should be about operational use, measured through display energy certificates (DECs) or something similar. Whatever is used should reflect some kind of actual reality, not drawings on a computer, as fantastic as they may be.
One rotten apple
Trying to provide service is one of the most challenging things ever. If we can truly meet everyone’s expectations it would be a miracle. If we can ever find a way to manage that achieves what every person wants, then surely the Holy Grail has been found.
One of the beauties of being humans is our differences, but it is also one of our frustrations. The fact that others do not see things as we would want them to, react as we require, or comply as we need, gives a source of annoyance that can seem never ending.
If a mistake is made, surely a genuine and heartfelt apology is sufficient. But for some an apology is never enough and they will never let the issue go. Whenever chance presents itself, the mistake is bound to be raised time and again.
For the amount of industries, professions and operations that are entirely reliant on customers and customer service, there needs to be focus on the impact of veering from the right direction.
That direction can be different for all manner of people but what is overriding is the need to make sure activities and communication stay flexible to accommodate everyone. A lot easier said than done. In some instances there will be those that will not listen nor want to be reasonable under any circumstances – the bliss of human nature and variety.
The challenge for service providers is to make sure their reputation is not compromised by those who will always be unsatisfied; those for whom nothing is good enough whatever is done or provided to them; for those whom nothing has a value they are willing to pay for.
Of course the real challenge comes when, in a community, one rotten apple spoils the relationship and the service for all. Those providing good service will rise over these challenges.
MIPIM 2012: Why making a Splash in Cannes is vital for UK growth
A week ago, sodden and shivering after returning back to my apartment somewhere off Christian Dior Street, I questioned why I had recontrar-ed to Mipim. I figured some of the boats may had departed since my last visit in 2009. I knew I probably wouldn’t see anyone from the SFO downing canapés on the Tchenguiz yacht, but I never thought the weather would be as angry as that recent mid-market tabloid splash hideously implying that Mipim was all about public officials embarking on seedy pursuits.
While JLL’s Monday night bash with London First and the deputy mayor was a who’s who of industry folk, the vibe around Cannes was admittedly akin to an Italian cruise liner: cold, wet and sinking fast.
Switch forward to Friday, and Tom Bloxham ushering property A-listers into his mountain-top pool with the promise of one final glass of bubbly was a sight to behold. It was a wonderful afternoon spent in the company of Mancunia and luckily for all concerned, those dipping in were urban splashers rather flashers.
Other parts of Mipim were a bit more bare, however. Anyone who snuck down in the basement of ‘the bunker’ – the not-so-affectionate term given to Mipim’s conference centre – couldn’t have helped noticing the sparseness of quality developers. Various Russian stands extolled the virtues of faraway lands while Formula One-style female flag wavers swooned from great heights, hanging out free kittens to anyone who’d take a brochure. As the girls shimmied around, stilt-like, with thighs at most people’s shoulder height, there was the overriding feeling that we perhaps needed two Mipims.
One would be for all the real stuff that might one day be built and the other could house all the Playmobil stuff in made-up places.
But many people thought Qatar was a made-up place until a few years back. And one pointed remark made by one senior observer was how much closer the Qatar stand was getting to the London Stand. Next year it will have totally swallowed it up.
The prominence of London certainly irked many of Mipim’s regional UK representatives. But as investment continues to pile in to the capital, the two-tier recovery shows little signs of levelling out. And even those investment firms based in the North admitted much of their business was focused down South.
And what of criticism around the attendance of public bodies, such as councils and the Crown Estate and by war-hero Olympics minister Hugh Robertson? Well, like much of the gutter press currently in the dock, most will have the good sense to ignore it. They very thought that – in a time of mass austerity – public developments shouldn’t be actively seeking foreign investment on the only real world stage available to them if frankly ludicrous. But one week ahead of the Budget, there’s little value in too many seeking a big debate on the subject.
As the weather perked up from Tuesday, so did the fizz in the air. Parties were toned down and some resembled Travel Lodge weddings, but the atmosphere was one of positivity
Despite Mipim legend and former Hogan Lovells boss Bob Kidby retiring a couple of years back, the legal elite still managed to rock their way through Cannes led by Kidby’s protégée, HL partner Matthew Ditchburn, the industry’s best known insolvency lawyer. It’s fair to say he’s a bit more fresh-faced than some of the other legal elite who were in attendance and renditions of The Killers and Kings of Leon’s hits certainly offered a new backdrop for people to grab a ‘Partner’ by the hand to.
And as some of the UK’s signature regeneration projects around Stratford, Kings Cross and Salford begin to breath new life into our economy, we should be looking to project ourselves abroad. Just as ministers are beginning to realise we’re competing on a global stage with aviation, so we are with property. And if attendance at the Tom’s Friday Urban Splash-athon is indicative of a healthy market, maybe we’ll see a few more developers – rather than developments – under water this time next year.
From Bricks to Clicks
Fourteen shop units close each week! This sounds scandalous and horrific but it is a tale that will run and run and nothing will really change. Since the development of the first Arndale Centre we have lived through the slow, gradual, eroding power of the High Street.
The boom of easy access, car ownership, seven-day trading, relaxation of out-of-town planning, and the major chains and supermarkets’ growing power have all been nails in the High Street’s coffin.
My question is, why are we now paranoid about the terminally ill patient? Have we only just woken up to what has been inevitable for decades?
The biggest challenge for the High Street and our Town Centres is the disparate ownership of the buildings, which means there is a selfish approach to solving an individual investment problem, such as a vacancy, rather than a coordinated, strategic resolution.
The solution to harnessing different mind sets and investment strategies lies in knowing how property investment works and how the ownership of our towns and cities is made up.
Investors fall broadly into four categories: pension funds and investment companies which are long-term owners of units and blocks; developers which want to acquire, build, redevelop, sell to investors and move on; traders who will buy and sell units within a relatively short timescale, usually three years, and hope to add value to make a profit; and the owner-occupiers who own the building and run the retail operation.
Within a town or city our High Streets will typically have a variety of owners with one party owning one building, or a chunk of buildings, and others doing the same. To coordinate High Street owners’ interests is asking a lot of the investors, traders and developers – it is virtually impossible!
In comparison, town Centre managers have been with us since the 1980’s and were introduced to start turning the tide and aligning varied interests. The past three decades have shown a change in townscapes’ usage as technology evolves and we inevitably slide from bricks to clicks.
We need to open our minds and let the High Street continue its regression, embrace the changes that come and allow flexibility for the property experts to make money by keeping their assets alive… although there will still be pain along the way.
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