INTELLECTUAL PROPERTY
Oliver Fenn-Smith, the new chief executive of The Portman Estate, on development plans, environmental responsibility and the importance of controlling ground floors
Interview: Mark Riddaway
Portrait: Kris Piotrowski
You’ve recently stepped up to be chief executive of The Portman Estate after 12 years on the board. What were you doing previously?
I joined The Portman Estate in 2005 as property director. Prior to that, I’d spent 11 years at the Grosvenor Estate, then been a garden designer for three years. I was on the property board at Grosvenor, jointly running their London estate, when I decided I wanted a change. I knew that I wanted to remain within property, but while waiting for the next opportunity I did a garden design course at the English Gardening School in the Chelsea Physic Garden. I set up my own garden design business and was running that when I was approached about the role here at the Estate, and it was an offer that ticked all the boxes. I still love gardens, though. I’m really interested in the green spaces on the Estate here—the squares, but also the little gardens, roof terraces and courtyards that people have in their flats and offices.
As property director, you worked very closely with your predecessor as CEO, Bill Moore, during his six years here. How would you characterise his tenure?
Bill came here from the military with skills that were very complementary to those we already had in-house, with me on the property side and Mark Southern as finance director and now chief operating officer. Bill brought a huge amount of experience in leadership, in driving delivery, and in cultural change. We’ve always had a strong culture—it is very important to us—but I think Bill developed that further and has left a wonderful legacy.
So, how would you describe that culture?
I think it’s a collegiate culture, we recognise talent, it’s not hierarchical, we get on well but we work extremely hard, hopefully with very good results. We invest a lot of time on wellbeing and how we can make the Estate a place that people want to work. I think having the Portman family behind us helps to set the culture: we run a very professional property company, but in the context of a family business.
How would you sum up the Estate’s role?
Ultimately, it’s about realising the value of the assets within a 110-acre portfolio in the West End, owned by the Portman family. But it’s more than that. It’s also about promoting this area of Marylebone and creating something for future generations—not just of the family, but of the people who will live and work in the area in years to come. I think that seeing ourselves as part of a wider community is vital to what we do. We are custodians of the area. It has been in the family for 500 years, and we hope it will continue to be for the next 500 years.
It is also our responsibility to engage with businesses, residents, schools, the council. We have a charitable foundation, the Portman Foundation, which works with local organisations. We’re currently partnering Carers Network, which supports unpaid carers in Westminster—we raised £30,000 for them last year. It is vital that estates like ours are relevant to the areas they’re set within, and also to London as a whole.
How much has this area changed in recent years?
When I started working in Mayfair in the early 1990s, people didn’t see much call to go north of Oxford Street. That has changed completely. There are a couple of major factors. Firstly, we have worked hard to maintain a balance of property uses: roughly a third residential, a third offices, and a third retail and hotels. Having that mix gives real vibrancy to the area. To maintain it, we don’t necessarily convert buildings to the highest value use—we look at the entire 110 acres.
Secondly, you need to invest in the buildings themselves. Twenty years ago, when the current Viscount Portman inherited the Estate, it was in need of a lot of investment. Since then we’ve been investing £20-30 million per annum, and we have a programme of another £350 million to invest over the next 10 years. We’ve been restoring and redeveloping our buildings, and we’ve been taking back control of buildings as well.
What does that mean?
Historically, a lot of our properties were out on long head leases, and that limits your ability to really shape the character of an area. It’s particularly important to control the ground floors—the restaurants and retail—as it’s those tenants that set a very visible tone. We can take back control of an asset when a long lease comes to an end, or by actively entering into discussions with head lessees. It can be a slow process, but it’s central to our strategy.
Any notable successes?
We’ve been particularly successful on Edgware Road—we’ve picked up a number of blocks there. Another good example is 1-9 Seymour Street, the old police station. That was out on a 104-year lease. When it ceased to be a police station, though, we were in a position to buy back the lease. We’ve just completed a major mixed-use scheme there after a three-year development. After we’d acquired control, the choice was, do we develop it ourselves, partner with another developer, or sell it out on a long lease for someone else to develop? We decided we would develop it ourselves and create a core asset in the middle of our estate, taking advantage of our very talented team. It’s been our largest, most significant development to date.
1-9 Seymour Street
Is that approach likely to set the template for future developments?
Our strategy is certainly moving that way. Of course, we will continue to partner with others on occasion, because we can’t do everything ourselves—we have a whole estate that needs to evolve—but if I look around, I can pick out various other properties where I would want us to undertake the redevelopment ourselves. The next big one is 1-4 Marble Arch; we have planning permission to create seven floors of offices and a new 20,000 square foot flagship retail store. That again is a direct development, where historically we might have sold it out to somebody else. Doing it this way means we’ll be able to choose the retail tenant, which will hopefully help us reposition that end of Oxford Street and Marble Arch.
The Marble Arch Place scheme, which is right next door, is being led by Almacantar, but we’ve negotiated for the retail facing Marble Arch to come back into our direct control. We’ll then be able to choose the retail tenants there, too, so we should be able to start really influencing that part of the Estate.
Do you have different plans for different parts of the Estate?
It’s certainly not a homogenous area. Its character really changes as you come from Edgware Road in the west and work your way east. We have village-y areas—Chiltern Street, New Quebec Street, Seymour Place—where we can curate an independent retail offer. Then we have our major thoroughfares, like Edgware Road and Oxford Street, where historically we haven’t had so much control, but we’re starting to see some major changes, and these will take shape over the next five to 10 years.
On Edgware Road, we now control about 70 per cent of the frontages, so we’ll see a lot of evolution there. On Oxford Street, too, we’re starting to make our mark. With Baker Street, we don’t have much direct control, but we’ve been working with Derwent London on 19-35 Baker Street, which is a very important site in the middle of the Estate. At the back is a car park, and that will be transformed into a whole new independent retail quarter, which Derwent London will develop, but which we will then take control of and curate. These more major streets are definitely going to change in character—I think we’ll see them becoming much more a part of the Estate, more recognisably influenced by our approach.
What is your relationship like with your next-door neighbour, The Howard de Walden Estate?
It’s very positive. We have a great relationship. Both of us see ourselves as being part of something bigger, part of Marylebone. We’re working together on lots of initiatives—the Journal, the Marylebone Food Festival, London Design Festival. We shared a tent with them at the JLL triathlon recently, which was great fun. We see it as a really important link—the more we can do together to promote the whole area, the better for both of us. We each have our own characteristics—they have their world class medical area, for example, while we have a significant number of hotels; they have the high street, while we have our more villagey areas—so we’re complementary rather than competitive. When you take the two estates as a whole, you have a really interesting mix.
Marylebone has a very high proportion of rental properties. Why is that and what impact does it have on the area?
It came about as a direct result of changes to the leasehold reform legislation. From 2002, because of changes to the law, it became easier for long leaseholders to extend their leases and acquire freeholds, so there was a danger of the historic estates being broken up. A lot of the estates, including ours, changed their strategy at that time to renting out their residential property wherever they could. As a result, the nature of the occupiers has changed.
We now have a portfolio of more than 600 assured shorthold and market tenancies. That means we have a more transient population, but it also means we have people living in our properties rather than holding them as a pied a terre or an investment. That’s vitally important, as it means we have a large and characterful population, which supports the restaurants and the shops. We make sure we know our customers extremely well. We have a customer services manager, and she meets and greets everyone who rents from us, whether residential or commercial, and we get direct feedback on why they’re here and what they want from us.
The country is facing a fairly uncertain economic future. How can you ensure that you’re prepared for whatever is thrown your way?
We have to continue to provide properties that people want to rent, whatever happens. The portfolio is all concentrated in the West End, so it isn’t diversified geographically, but we can diversify in terms of use. You can also diversify in the nature of the leases that you’re offering—you can have short leases or very long leases, and leases that are much more all-inclusive. On the rented residential side, people are used to just paying rent, with no separate service charge, and that model is now moving across to the commercial market—we’re seeing companies taking shorter leases, more flexible leases, with fewer hidden costs. Co-working is obviously very attractive to young businesses. We’re constantly looking at how we can evolve our offer and remain as relevant as we can.
The Estate is involved in the Low Emission Neighbourhood and Wild West End, and you’ve built your first Passivhaus. Do you feel a particular responsibility to be an environmental leader?
Perhaps a champion rather than a leader! Environmental concerns are very relevant in central London, we know all the issues and it’s important we address them. We look carefully at all our new developments. 1-9 Seymour Street achieved a BREEAM outstanding rating, and we’re very excited about our Passivhaus scheme on Gloucester Place Mews, which is a first for a listed building. Some of the most important work we do isn’t necessarily the most exciting—for example, looking at our existing buildings and thinking about how we can improve insulation. The bits of work that we quietly do behind the scenes probably have as much impact as headline-grabbing initiatives.
Your feet haven’t been long under the desk, but do you have a sense yet of what you want to achieve as chief executive?
Having been part of the Estate’s strategic thinking for 12 years, I think it would be surprising if I said that it was all now going to change! It is going to be very much about evolution rather than revolution, building on the work that we’ve done to date. It may be more of the same, but that is still a very exciting proposition. One of the reasons I was attracted here in the first place was that I could see its potential and see how much could be done. As a team, we take tremendous pride in seeing our developments come to fruition, seeing new retailers open, seeing small start-ups succeeding and our customers enjoying working and living here. We have done a lot, but there’s still so much to do.