LONDON – Interest rates are up, Britain’s Brexit agreement is in limbo and a new financial crisis could be brewing, but that hasn’t stopped some of the world’s biggest corporations — Apple, Facebook, Google, Berkshire Hathaway and Chanel — from sinking their money into London property for the long-term.
Chanel revealed over the summer that it was shifting its corporate headquarters to London with new offices set for New Bond Street, while Apple has secured 500,000 square feet of office space at the newly redeveloped Battersea Power Station and the property division of Berkshire Hathaway has teamed with high-end real estate agents Kay & Co. to break into the U.K. property market.
Google is building a 1 billion-pound London headquarters at the new King’s Cross development, and earlier this year Facebook moved into new, bigger offices in Fitzrovia, creating an extra 800 jobs.
Fashion and luxury retailers are feeling just as bullish about the British capital. “Retailers all want to be in London. The city still has the most billionaires in the world, and the luxury brands want to be here,” said Matt Farrell, director at Trophaeum Asset Management, which has transformed Albemarle Street — once a charming but sleepy strip of art galleries — into a luxury-goods thoroughfare.
The company is also working on spiffing up St. John’s Wood high street in north London, a wealthy residential neighborhood with a retail offering in need of an upgrade.
Trophaeum is the privately owned property company that installed brands including Thom Browne, Agnona, Amanda Wakeley, Self-Portrait and Aquazzura on Albemarle Street, and secured space for Alaïa and Chloé on nearby Bond Street. It has worked with brands on Bond, convincing them to break through and create entrances on Albemarle, with Cartier set to open a double frontage later this year on the street. Albemarle will also welcome London’s first Givenchy store, with triple frontage on Bond, Albemarle and Grafton streets.
Having become one of Europe’s top property investors in luxury retail, Trophaeum decided to launch a new venture in January 2019, Trophaeum Asset Partners. The new business will mimic the big London property owners such as the Crown Estate, the Pollen Estate and Land Securities and take on investment from institutional and sovereign wealth funds so that it can do bigger deals.
“After completing a lot of the work on Albemarle Street we want to start doing much bigger-sized deals and making acquisitions around the 300 million-pounds mark, and in order to be able to do that we are going to need to institutionalize our activities,” said Farrell. “So we are planning to launch a venture in January 2019 that will allow us to accept external money and use it to apply our curation skills in the luxury industry. Institutions had been knocking on our doors, but until now it wasn’t part of the business plan.”
In the meantime, Tropheaum still has to put the finishing touches on Albemarle. Last year it opened Isabel, and the fusion restaurant and bar have since become a jet-setty hot spot, where the staff wear Johanna Ortiz-designed uniforms. Earlier this year it hosted the Alaïa store opening dinner, with guests including Sarah Burton, Vivienne Westwood, Naomi Campbell, Manolo Blahnik and Christopher Kane.
Farrell, who also oversaw the opening of Robin Birley’s new members’ club Oswald on Albemarle, said the food offer is key to the street and he’s looking for more variety.
“What we’ve learned from the boom in online sales is that you cannot rely on a fashion store to drive footfall,” he said. “You need to have other business activities, and food will drive footfall to fashion shops. Isabel and Oswald’s Club were tailor-made to create a place for all the Bond Street shoppers to go and have a high-level place to eat.”
The idea now is to lasso a Cova or Sant Ambroeus-style, high-end café where people can eat at the bar. “In cities like London and New York, we are always on the go, so we want to have a Milanese-style patisserie. Food is the missing part of the puzzle,” said Farrell. Trophaeum also owns and develops real estate in Italy — and in particular Milan’s Golden Triangle — hence the comparison.
Farrell said that Trophaeum is hunting down affordable, Millennial-friendly labels, and working on the leisure offer, with the aim of installing a gym, hair salon or spa.
In August, Trophaeum scored a coup, getting Global Blue to open its first VIP, high-net-worth lounge on Albemarle. The multilingual, invitation-only lounge, shopping and concierge service is aimed at international big spenders and Global Blue said it expects to greet more than 40,000 guests in the first year alone.
It offers a dedicated shopping consultancy, immediate tax refunds and space for high-end brands and jewelers to connect with global customers. Global Blue has similar sites in Milan, Rome, Venice, Madrid, Munich and Paris.
Trophaeum’s strategy in luring brands to Albemarle has been an upfront one.
“The reality is that every brand’s first desire is to be on Bond Street,” said Farrell. “What we do is say why we are the best alternative after Bond Street. We know that the biggest footfall in Mayfair is on Bond Street, so what we say is that while Bond Street is the best place to be, if you don’t have the money for Bond, here’s why we’re the best alternative.”
Albemarle Street also benefits from the halo effect of Bond, while charging far lower rents. The two are linked through The Royal Arcade, which is lined with upscale stores including the perfumers Ormonde Jayne and chocolate shop Charbonnel et Walker.
Rents on Albemarle are less than a third of those on Bond Street and there’s no key money to pay. On Bond, tenants have to pay 5 million to 6 million pounds in key money just to secure the space and then 2,200 pounds a square foot for rent annually.
Trophaeum is also turning its attention to St. John’s Wood high street and wants to bring its experience building Albemarle to bear in a residential area.
“We sat there and said, ‘Wait a minute — we have homes here, some of which are worth 30 to 40 million pounds. This is an opportunity to create a high street that’s in synch with the affluence of the neighborhood. All the raw materials are there because of the spending power.’”
Trophaeum has since opened a branch of The Ivy and a Good Life Eatery, while a new French bistro concept by British restaurateurs Corbin and King will open there in November. Trophaeum has also installed Core Collective, the cycling and pilates group from South Kensington, and plans to open a Face Gym facial clinic, which already has locations on the King’s Road and at Selfridges.
Asked why Trophaeum is so upbeat about London, Farrell said it’s a city for business. The one big drag on retail expansion, he added, is business taxes, which can amount to 40 percent to 50 percent of annual rents. Other than that, it’s a winning prospect.
“We have a big business in Milan as well, but what we like about London the most is the rule of law. It has the best court and judicial system in the world, in our opinion. The eviction process if you don’t pay is extremely rapid. It keeps everybody honest and paying their rent. There is a land registry so you see what people have paid for buildings. Everything is transparent, clear and there is a rapid rule of law. In Italy, if you want to evict someone, or in France, it takes three to four years to get them out. That’s why we love investing in England.”