Real estate leaders have called on policy makers to help developers that are focusing on conservation and retrofit projects, after Michael Gove knocked back controversial plans by retailer Marks & Spencer to bulldoze and rebuild its Oxford Street store on environmental grounds.
The secretary of state for levelling up, housing and communities on Thursday went against the recommendation of the Planning Inspectorate, saying that he “does not consider that there has been an appropriately thorough exploration of alternatives to demolition” for Orchard House at 456-472 Oxford Street, W1.
With M&S chief executive Stuart Machin describing the decision as “a short-sighted act of self-sabotage” and now saying the retailer may leave Oxford Street, real estate professionals have offered their own takes on what precedent may be set by the decision.
No time for a victory lap
Tyler Goodwin, chief executive at Seaforth Land, said there could still be “an exciting and successful, profitable future for a renovated and redeveloped M&S building” on the site.
“This [decision] is great news for the built environment, but this is no time for a victory lap for the opponents to the demolition,” Goodwin told EG. “That celebration should be saved for when policy makers, opponents and indeed the market collaborate to ensure M&S is empowered to deliver a world-class and profitable refurbishment that can then be a case study for a better future.”
Goodwin referred to his own appearance at last year’s public enquiry into the scheme, at which he spoke against the demolition and said: “We need a new way forward, where development versus conservation need not be a zero-sum game.” Speaking now, he added: “Navigating this journey now needs to be addressed with some urgency.”
Goodwin acknowledged what he called the “critical issue” of development risk and profitability
“Retaining, reusing, and adapting existing buildings often involves much more risk and can be far more expensive than demolishing and building new,” he said. “At Seaforth, like many developers, we are fiduciaries partnered with pensions and other institutions who need a reasonable risk-adjusted return to meet their own obligations. If we fail to deliver those returns, the capital will not return to the opportunity.
“If we want to encourage more developers to embrace the additional risk, we must find ways to mitigate risk or improve the returns. Conservation and policy makers can help support developers favouring conservation with accelerated approvals, increased density, reduced charges or indeed through helping to support and celebrate developments that are making a difference. The more we facilitate the success of responsible developers and developments, the more capital will rush in to fill the need and the more responsible developers we will create.”
Risk
At Almacantar, chief executive Mike Hussey told EG that M&S “took a punchy ‘take it or leave it’ stance, and Gove chose, after an inordinate delay, to ‘leave it’, which was always a risk”.
Hussey added: “We know now that even though the applicant is a significant employer and an important part of the community, that counts for very little if they don’t ‘tick the boxes’. There may well be a viable refurbishment alternative on this site, but it may not include M&S as an occupier in the future.
“The wider implication of this and other major decisions is that If developers perceive the secretary of state to have acted overzealously, then we will see far fewer major applications and fewer high-quality buildings, which is where a lot of the occupier demand is. I welcome a tougher challenge for the provision of new buildings but, overplayed, it comes at the risk of a major plank in the government’s growth plans, the construction sector, being severely curtailed.”
Major step forward
FORE Partnerships managing partner Basil Demeroutis described the rejection as “brilliant news” and “a major step forward in promoting retrofits ahead of new construction”.
“We are in a climate emergency, not a climate ‘hiccup’, and we need to take definitive, bold steps,” he said in a social media post. “If anything, the current extreme temperatures in Europe that we are seeing only reinforce the existential conditions that we may face with increasing regularity and intensity.
He added: “I fully appreciate that not all buildings can be saved forever. But the burden of proof to allow for demolishing buildings needs to be significantly higher than it has been. I don’t think that burden has been met here, by some margin.
“Indeed, the issue is not so much that the building was not fit for purpose, but rather that the purpose needed reimagining to fit the building. Retail strategies in particular need a complete rewrite as the last decade has fundamentally changed consumer behaviour, tastes, preferences, and buying patterns. Plenty of retail buildings have been turned into something more forward-thinking; why not this one?”
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