Not Offices: Selfridges Braves An Unfashionable Future For Its Oxford Street Flagship
The fashionable answer to a property question isn’t always the right one.
Whilst other Oxford Street department stores are being converted to offices, Austrian real estate group Signa and Thai retailer Central Group are leaning toward a luxury hotel and serviced apartments.
Before the sale, the smart money was on Selfridges following Marks & Spencer, John Lewis, Debenhams and House of Fraser flagships into office conversion. That option now appears to have been rejected.
Signa/Central are betting that Selfridges' brand is strong enough — and London’s international tourist appeal robust enough — to make the hospitality sector the high-yielding option, Retail Gazette reported.
London’s luxury retail sector has struggled during the pandemic. Before Christmas Harvey Nichols, one of Selfridge’s rivals in the luxury department store business, secured £66M of additional funding to help it make a successful post-pandemic recovery.
A hotel on-site at Selfridges means diversified income and potential for mutually supporting sales and marketing.
The idea is not as new as it looks. Selfridges Hotel operated on the site for 40 years until the late Noughties, and the floorspace has been unused since.
Late last year the prospect of converting the upper floors of John Lewis’ 679K SF Oxford Street flagship into offices attracted a series of international property bidders.
Hines, in partnership with Korea’s National Pension Service; Helical, in partnership with JP Morgan Asset Management; and Nuveen Real Estate are the final three bidders to buy the 300K SF development opportunity. The sale price of £150M is balanced by the value of the converted office space said to be approaching £750M, React News reported.
Marks & Spencer plans to add 200K SF of office space to its Oxford Street store.
Public Properties Establishment will convert 145K SF of the House of Fraser department store at 318 Oxford Street to offices. The upper floors have been earmarked for conversion to six floors of offices, including an additional floor. Lower floors will have leisure uses.
Next door Debenhams' former Oxford Street flagship is expected to see office conversion, whilst a very short walk to Fenwick’s department store on Bond Street leads to another potential 53K SF office conversion.