The New West End Company has launched a plan for what will be the largest Property Owner Business Improvement District in the UK, aiming to raise £16m to galvanise investment into the West End.
The Property Owner BID would be only the second of its kind in the UK, following on from the Heart of London, which raised £7m to revitalise the area around Leicester Square and Piccadilly Circus. It was put into place in July.
NWEC’s new proposal will unite landlords across 25 streets in the West End, including Oxford Street (pictured), Bond Street and Regent Street.
Bias towards shorter leases
BIDs have been around for more than a decade but were previously paid for only by occupiers and catered mainly to their needs. As a result, BID initiatives were broadly tailored towards tenants signed on shorter leases, rather than landlords, which generally hold buildings for the longer term.
The current New West End Company occupier BID, which has been in place for the past 10 years, charges a levy of an additional 1% of business rates for those occupiers in the area with a rateable value of above £250,000 pa.
In its current capacity it also represents a number of landlords who contribute voluntarily.
But now, as a result of government legislation enacted in December last year, official BIDs representing property owners can be established with a longer-term viewpoint.
The New West End Company would use funds raised by its membership, alongside the £25m currently contributed by members of the existing occupier BID, to increase the area’s property values, shape policy decisions and improve the environment for those who invest, work, live in and visit the West End.
David Shaw, head of The Crown Estate’s Regent Street portfolio, and chair of the New West End Company’s property steering group, is urging the 125 landlords that hold properties with a rateable value of more than £250,000 per year to support the proposal.
He said: “There are two things that you need to think about in terms of where the money will be spent, if you vote in favour of us. Both are longer-term: public realm, which drives people because environment is important when deciding where they choose to shop; and also lobbying and marketing on issues that matter.”
Shaw added that, in the past, the West End had been considered “the only show in town” globally by retail occupiers, but that it faces increasing competition from new shopping environments and leisure hotspots such as Dubai. This meant that more must done
to encourage non-domestic investment.
Capital values increase
Research conducted by CBRE on behalf of the New West End Company assessed the benefits of the £10m of works it intended to carry out on Bond Street with receipts from the levy. It estimated that rental and capital values would increase by between 3% and 8%. The owner of a £100m property with a rental income of £2.5m, for example, would contribute £100,000 pa to the BID, but according to CBRE’s research, would see a 329% return on its investment.
A consultation and ballot next month will determine whether the Property Owner BID is successful. It needs 51% support in terms of the number of landlords and as a percentage of total rateable value to be voted through.
Toby Coultard, chief executive of Great Portland Estates, said the move would “help immeasurably” with what the New West End Company is trying to achieve.
“The extra capital that will come through will provide it with significant extra firepower to improve its offer in a competitive market,” he added.
Should the new BID get majority backing, it will become operational on 1 January, beginning a term of up to five years.
