Patron saints and purple reigns
Insights

Patron saints and purple reigns

They say good things come in threes and the country (Londoners in particular) have the following ‘reasons to be cheerful’; number 1. the arrival of the long-awaited and much vaunted Elizabeth Line (London’s east-west railway), 2. the Queen’s platinum jubilee delivering an extra bank holiday and excuse for a party, 3. mid-June temperatures reaching levels higher than Jamaica and the Maldives (apparently). After two years of lockdown and enforced social isolation these are, relatively speaking, cheerier times – albeit against the backdrop of grey skies in the form of some very challenging economics.

The return to happier days and ‘normality’ has not been a linear experience and the acquired acceptance of what is or should be ‘normal’ changed in that period between Spring 2020 and Spring 2022. Whether it’s the 5 days-a-week commute to a distant office or a routine shop in the high street, Covid accelerated structural trends that were already latent in the consciousness.

Re-thinking retail

During lockdown many people shifted to doing their shopping online. That trend has largely continued and shopping is now essentially a leisure activity, an event to assess the quality of physical goods and estimate sizes and quantities before ordering delivery at home. With no need to carry heavy bags there’s a greater inclination to stop and commemorate a days’ shopping well done, a coffee to plan the next excursion or a spontaneous visit to a cinema or theatre to make a day of it. That’s the domestic consumer today.

The tourist is an altogether different creature. The shops are a ‘destination’ for the visitor, be they individuals from across the land or those making the trek via sea or air. And as a destination, retail has to offer something special, goods beyond those available in local establishments or locations that offer more than just purchases. Then there is the incidental consumer, passing by and enticed by an item they didn’t know they needed or wanted.

A very welcome Jubilee boost

Whatever type of consumer it was, there was a sharp increase in footfall on the high street during the bank holiday week that marked the Queen’s 70 years on the throne, according to the British Retail Consortium (BRC)1. The number of people visiting shops was up 17.1% over the Jubilee week, compared with the average for May 2022.

As well as stocking up on supplies for the bank holiday weekend, many people took advantage of the extra public holidays to socialise with friends and family as data from Barclaycard showed that spending in restaurants was up 41.5% Thursday-to-Sunday, compared with the same period in 2021; spending in pubs, bars and night clubs rose by 74.2%, while entertainment spending increased by 67.3%2.

Keeping faith

The flagship of our portfolio is St Christopher’s Place Estate, London W1, a mixed-use investment combining retail, restaurants, offices and residential property in pretty pedestrianised streets in the heart of central London’s shopping district.

This unique thoroughfare and adjoining streets between Oxford Street, Wigmore Street and Selfridges, comprises 150 separate lettable units; 50 shops and restaurants, 40 office suites and 60 apartments. The estate, like the rest of Central London, was severely impacted by the government lockdowns during the Covid crisis. As a major component of BMO Commercial Property Trust, this led to the Fund slumping to a heavy discount, exceeding 60%, during the early pre-vaccine days (April 2020). That was a discount to NAV deeper than during the global financial crisis (+40% 2007-2008).

While we can’t schedule events like the jubilee at will, it is good news for us, as commercial property landlords, that given a reason, consumers will return to the high street. This goes some way to quashing the retail death spiral worries. In St Christopher’s Estate we are seeing customers coming back, footfall at weekends is increasing as the alleviation of pent-up social restrictions finds an outlet. By midsummer 2022, footfall was back at, and on some days ahead of, 2019 levels.

St Christopher’s Place is renowned as one of London’s premier pavement dining destinations, which has been enormously beneficial in an age of social distancing. James Street, within the estate, was temporarily pedestrianised over the summer of 2021 and Westminster City Council appears supportive of this move becoming permanent as part of the Oxford Street District Improvement Programme. In this jubilee year at least, with outdoor commemorative events positively encouraged, pedestrian friendly initiatives are enjoying a heightened acceptance.

The office lives on

Similarly, the return to office working (even a few days a week) has been a welcome development. Today, offices on the estate are seeing a renewed level of appetite as the hybrid working model evolves and offices are found to be a still necessary element in the new work/life mix. A central London location in an area with boutiques and restaurants, for incidental shopping and social gatherings, scores points. As such, returns from the office segment of the portfolio are expected to accelerate over 2022. In another observation, we have seen yields compress and rental growth picking up. While so far, the rental growth from office investments has been marginal, it is positive nonetheless. Furthermore, sentiment in both London and the regional office market is becoming more upbeat with well-located, quality assets, with a strong tenant base receiving good levels of interest.

Grounds for optimism

Looking ahead to Autumn and the opening of the Elizabeth Line’s Bond Street station, there are grounds for further optimism. In the few weeks that the line has been open it has already been heralded a game changer. It brings a far larger tract of the country to within easy reach of London. Faster and more convenient commutes to work, a gateway for domestic tourists via Paddington, Farringdon and Liverpool Street, international travellers to and from Heathrow and Kings Cross St Pancras (Eurostar) (Thameslink from Farringdon), all presage a new era for central London and BMO Commercial Property Trust’s St Christopher’s Estate3.

1. Jubilant improvement to UK footfall. 6 June 2022. (brc.org.uk)

2. www.reuters.com 6 June ‘Thank you Ma’am – UK retail and hospitality get Jubilee fillip.’

3. In the period from 31 December 2021 to 31 March 2022, St Christopher’s Place increased in value by 0.1 per cent. This represented the first quarter the estate has increased in value since the outset of the pandemic. Activity has rebounded well with many of the food and beverage occupiers reporting ongoing improving trade. We are hopeful that this trend will continue throughout the year, supported by the much-anticipated further opening of the Elizabeth Line.

30 June 2022
Richard Kirby
Richard Kirby
Fund Manager, Balanced Commercial Property Trust
Richard Kirby photo
Richard Kirby
Director, Property Funds, UK
Share article
Share on linkedin
Share on email
Key topics
Related topics
Listen on Stitcher badge
Share article
Share on linkedin
Share on email
Key topics
Related topics

PDF

Patron saints and purple reigns

Risk Disclaimer

The value of an investment is dependent on the supply and demand for the shares of the Investment Trust rather than its underlying assets. The value of an investment will not be the same as the value of the Investment Trust’s underlying assets.

 

The value of directly held property and property related securities reflect the opinion of valuers and is reviewed periodically. These assets can also be illiquid and significant or persistent redemptions may require the manager to sell properties at a lower market value adversely affecting the value of your investment.

 

Views and opinions have been arrived at by Columbia Threadneedle Management Limited and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

Related Insights

8 May 2024

Peter Hewitt

Portfolio Manager, Multi-Asset Solutions

New opportunities as recession fears recede  

Three key themes are driving our investment strategy in 2024. We share the thinking behind the opportunities we have identified.
29 March 2024

Dan Walsgrove

Deputy Fund Manager, Balanced Commercial Property Trust

Making real estate work harder

With limited headroom for capital growth through yield compression real estate will need to work harder to offer an attractive risk premium. How can proactive asset managers unlock more potential?
Read time - 3 min
29 March 2024

Paul Niven

Head of Asset Allocation (EMEA)

A true, tall, tale of inspiration

Looking beyond prevailing trends to strategies for long-term investment success. We explore the merits diversification and explain why we believe active has the edge over passive investing.
Read time - 3 min
24 May 2024

Tochi Nwozuzu

Content Marketing Executive

Market Monitor – 24 May 2024

Global stock markets endured a difficult week after investors’ hopes of imminent cuts to interest rates in the United States and Europe were dampened by unexpectedly strong economic data.
Read time - 3 min
24 May 2024

Anthony Willis

Investment Manager

Multi-Manager Perspectives - Can the economic data save Rishi Sunak? Probably not.

It has been a busy week in the UK, not least with the announcement of a general election that no-one seems to think the incumbent Conservative party will be able to win.
Read time - 6 min
24 May 2024

Robert Plant

Director, Portfolio Manager, Multi Asset Solutions

UK overtakes the US in the race for rate cuts 

After a series of negative surprises in the US, the Fed is no longer expected to lead on rate cuts. Europe is now where all eyes are cast but will it be the ECB or BoE, that blinks first?
Read time - 3 min
true
true

Risk Disclaimer

The value of an investment is dependent on the supply and demand for the shares of the Investment Trust rather than its underlying assets. The value of an investment will not be the same as the value of the Investment Trust’s underlying assets.

 

The value of directly held property and property related securities reflect the opinion of valuers and is reviewed periodically. These assets can also be illiquid and significant or persistent redemptions may require the manager to sell properties at a lower market value adversely affecting the value of your investment.

 

Views and opinions have been arrived at by Columbia Threadneedle Management Limited and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

You may also like

Investment approach

Teamwork defines us and is fundamental to our investment approach, which is structured to facilitate the generation, assessment and implementation of good, strong investment ideas for our portfolios.

Funds and Prices

Columbia Threadneedle Investments has a comprehensive range of investment funds catering for a broad range of objectives.

Our Capabilities

We offer a broad range of actively managed investment strategies and solutions covering global, regional and domestic markets and asset classes.

Thank you. You can now visit your preference centre to choose which insights you would like to receive by email.

To view and control which insights you receive from us by email, please visit your preference centre.

Play Video

CT Property Trust- Fund Manager Update

Sed ut perspiciatis unde omnis iste natus error sit voluptatem accusantium doloremque laudantium