It’s been a long time coming, but this week EG learned of a major breakthrough in the Royal Mail’s property strategy.
Plans to consolidate its central London mail centres into a single state-of-the-art hub, could free up swathes of prime development land across the capital.
Since June – under the leadership of head of property Martin Gafsen and former British Land director Eugene Doyle – Royal Mail has been reviewing its central London mail centres.
One, covering south London, is at Nine Elms, tantalisingly close to the opportunity area around Battersea Power Station. Another is in Twelve Tree Crescent, E3, with the third at Mount Pleasant in Farringdon, EC1. The future of the Royal Mail HQ building in Rathbone Place, W1, is also under review.
As is the way with these things, a consultation period has begun. It’s brief – just three months. So if the Royal Mail is brave (and make no bones about it, it’s easier to be brave when the threat of privatisation is hanging over your head), it could be a happy new year for sizeable chunks of the property industry.
The plans follow a review of central London centres launched in June. And the background is obvious. By its own admission, Royal Mail has significantly more mail processing capacity in central London than it needs.
Over the past five years, the use of e-mail has driven down overall mail volumes in the UK by 13 million letters every day.
The spread of competition – more than half of all business mail is now carried by rival operators – and Royal Mail’s £2bn spend on new technology, equipment and facilities have accelerated the decline.
The news will whet the appetite of developers. Part of the Mount Pleasant mail centre could be freed up for mixed-use development.
In E3, the 11.1-acre office and warehouse complex would be freed up entirely for disposal or development, as the Royal Mail is proposing to move the delivery office to an undecided location. Given the wider plans for the surrounding area, the 12.9-acre Nine Elms site, which Royal Mail owns as freehold, will attract considerable interest if it comes to market.
Allies & Morrison and DP9 are already believed to be helping to work up residential-led plans for a major mixed-use redevelopment.
Royal Mail will be wise to the fact that it may be able to extract more value for the site if it first works up plans for it and secures planning consent. That already seems to be in train.
And then there’s the prime 2.3-acre Rathbone Place site, close to Tottenham Court Road, which Royal Mail also owns as freehold. It is perhaps the jewel in the crown.
It was previously eyed by former London mayor Ken Livingstone as a natural home for a major London conference centre.
There may be no appetite for that in these more difficult times, but the site at the end of Oxford Street already earmarked for redevelopment is brimming with potential.
This isn’t the first time that the Royal Mail has touted such a decisive property play, of course. It launched a strategy to realise value from its 43m sq ft UK estate following the 2007 appointment of Gafsen to lead its property team. And already some drips have been fed to the market.
In May 2008, the group sold a 0.4-acre former sorting office just off King’s Road, SW3, for £40m to Treasury Investments founder Borzoo Shirazi.
But even with the considerable governmental and union hurdles that are yet to be surmounted – not to mention the impact that a property sell-off might have on privatisation – this is a major step forward. And a welcome one.
The timing could be quite lucrative, too.
damian.wild@estatesgazette.com
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