Retrofit or Rebuild? M&S and the battle to greenify retail property
M&S’ proposals to overhaul its tired 1930’s Marble Arch flagship have been called in by the government for environmental review, despite the scheme targeting top-tier sustainability accreditations. Opponents have criticised the decision to rebuild rather than retrofit, fuelling feverish and contentious debate over how ageing retail stock should be modernised.
7 minutes to read
The probing into Marks & Spencer’s plans to redevelop its Marble Arch store by central government must come as a massive blow. The retailer has been a stalwart of the British high street for decades and is particularly vocal about its commitment to physical stores. It is currently in the midst of modernising under its ‘fit for future’ plan, transitioning to a sleeker, right-sized, greener estate.
Part of this process will undoubtedly involve deciding which stores to retain or dispose of. And of those remaining, how best to revitalise ageing stock in the most responsible and commercially-viable manner. Most recently, M&S’ regeneration of its Cheltenham and Chelmsford stores have successfully completed without complication. But revitalisation of its Marble Arch store is proving problematic.
Reimagining retail - a Marble Arch store for the 21st century
The retailer’s proposals for the ageing 1930’s flagship appear prudent. Given current market conditions and direction of travel on Oxford Street, a reduction in retail floorspace (to ca. 146,000 sq ft) has been proposed, with M&S stating current trading ‘highly inefficient’ at net gross efficiency of 50%. A reduced retail space will be complemented by alternative uses, notably ca. 491,000 sq ft of office space, complete with gym and restaurant amenity. A new pedestrian arcade, and public realm including urban greening and ‘pocket park’ in Granville Place also feature.
The existing flagship has always been very compromised (a fusion of three buildings into one). This has made the brand difficult to showcase, resulting in an underwhelming customer experience. The reduction of floorspace will bring multiple benefits, including improved trading, and realisation of alternative real estate value. Although a reduced footprint, the scheme is one of the first major retail-led regeneration proposals on Oxford since Covid-19. An absolute essential if the iconic street is to retain its status as a desirable global shopping destination.
The greenest store on Oxford Street?
The redevelopment will be one of the greenest Oxford Street has witnessed to date. M&S state the store will perform in the top 10% of buildings in London. And three globally renowned building accreditations are being sought. Office and retail spaces are on track to achieve BREEAM ratings of ‘Outstanding’ and ‘Excellent’ respectively, meaning the building’s shell and core will adhere to the latest environmental standards. ‘Platinum’ graded WELL standard is also being pursued, to ensure the building environment enhances occupants’ health.
Our own Knight Frank research analysis of BREEAM retail assets in London shows that if the development comes to fruition, it would be one of only a handful of green rated stores on Oxford Street – and the only green rated store on West Oxford Street. Currently, there are just two green stores rated ‘Excellent’ – Matalan at 151 Oxford Street (developed by AXA Real Estate IM) and Zara at 61 Oxford Street (developed by British Airways Pension IML) - both concentrated to the East. This despite massive, once-in-a-generation redevelopment of Oxford Street on the back of the Elizabeth Line.
Source: Knight Frank, BREEAM
Are green credentials enough?
But despite this seemingly impressive plethora of green building ‘badges’, the scheme has failed to avoid criticism. Campaigners including Save Britain’s Heritage and Retro First have mounted claims on environmental and heritage grounds. Calculations show demolition would release an equivalent of 40,000 tonnes of CO2 into the atmosphere – something campaigners say is ‘unacceptable’. Although conveniently failing to provide any equivalent carbon comparisons for this particular refurbishment process, campaigners say retrofitting should be prioritised. Authorities are now being lobbied to enforce the measure if they are as serious about reducing negative impacts of new commercial developments.
Michael Gove has since pulled the application for public inquiry, which will now undergo review by planning inspectors. It’s unsurprising central government have gravitated towards this case. It involves one of the highest profile British retailers, on one of London’s most iconic shopping destinations. An easy opportunity to re-assert to its political stance on sustainable development policy, in the follow up of COP26 last summer.
M&S are now left waiting on a decision of whether proposals can go ahead in current form. M&S Property Director expressed his ‘disappointment and bewilderment’ at the turn of events. Understandably so – the retailer has spent two years working in earnest collaboration with community stakeholders and environmental specialists.
M&S has every right to feel aggrieved given all other precedents that are being set further down Oxford Street. The former House of Fraser’s £100m office-led redevelopment, and £200m conversion plans for former Debenhams flagship both include demolition, yet have failed to attract the same level of scrutiny.
To rebuild, or not to Rebuild? That is the Question.
It’s clear the decision made to demolish the site has not been taken lightly. Despite campaigners’ claims, the conundrum over whether to rebuild or refurbishment is not a simple one. The UK Green Building Commission (UKGBC) adopts a ‘Maximise Reuse’ principle – advocating for reuse over demolition. But it acknowledges developers can face a diversity of barriers to refurbishment, including physical building conditions such as age, which could tip the balance between embodied vs. operational carbon benefits.
M&S extensively explored the viability of both a) ‘heavy refurb’ with retained façade, and b) ‘light touch’ refurbishment versus new build in its application, commissioning ‘whole life’ carbon assessments. Although refurbishment would offer lower initial embodied impacts, it concluded this would increase unacceptably over time, due to poorer operational performance and ongoing requirement for maintenance every 5-10 years. For context, the current store comprises a mish-mash of three buildings which have proven difficult to reconcile in modern times. These include the 1930’s Orchard House (456-464 Oxford St), Neale House (468 – 478 Oxford St) and 1970s Orchard Street extensions (23 – 24 Orchard Street and 10 Portman Mews South).
On balance, rebuild presented the most carbon efficient option. Despite a higher upfront carbon impact initially, this was outweighed by an operationally more efficient building with a longer life span. Heritage concerns also appear to have been addressed. Consultation with Historic England agreed none of the buildings are worthy of listed status, with exclusion from surrounding Conservation Areas. The Oxford Street façade (Orchard House) is acknowledged as having higher architectural quality to the everyday shopper. But it was ultimately concluded historic interest was limited, due to the façade not being unique or unusual: its original architecture altered over the decades.
An ambitious sustainability strategy also accompanies the submission, covering seven key themes. The strategy delves into granular detail, covering everything from procurement of local and low carbon construction materials, to climate resilient landscaping. Most recently in April 2022, an addendum to the application addressed compliance with new policies stated in the GLA’s publication of its Whole Life Carbon and Circular Economy report.
To date Westminster Council’s planning authorities have been satisfied with the assessment. And London’s Mayor Sadiq Khan has opted not to intervene given adherence to national and local requirements, including those set out in 2021 London Plan and Westminster City Plan (2019 – 2040).
What next?
The final outcome of Marble Arch will be watched with great interest, particularly by those seeking to regenerate and repurpose retail space. Like all planning applications, the outcome will be assessed on the individual merits of the site. However, there exists potential for widespread policy and sentiment change toward new build redevelopment, depending on how the decision sways.
The case will undoubtedly add fuel to the refit or rebuild debate. And some unpalatable figures will emerge, causing the industry to question why it shouldn’t seize on the chance to do things differently. The UKGBC has queried why 50,000 buildings in the UK are torn down each year, and has set out a roadmap to tackle avoidable demolitions. Its policy recommendations to disincentivise, including planning reform, and retrofit VAT relief, may now start to be seriously considered by government.
This could have far reaching implications for not just retail, but for all landlord developers attempted to repurpose stock, making any case for demolition increasingly difficult to justify. The decision to rebuild or refit will never be straightforward, and must remain asset specific. And factor in both short- and long-term considerations and metrics. But expect a more forensic approach on the horizon, as investment communities take an increasingly stringent stance on ESG.
There is a certain irony that in era when we are urged to ‘do the right thing’, M&S is being rebuffed for trying to do just that. And the voices that call for positive change are the most resistant to it actually happening.