Last updated 28th June 2022
The Crown Estate
The Crown Estate is a property business worth some £15.6 billion which is owned by the Crown but which is a commercial organisation, where profit is returned to the Treasury. It has delivered over £3 billion to the Treasury over the past decade and progressed some major re-development schemes in central London.
The group is a significant property owner and manager in the West End – where its 10 m sq ft portfolio includes all of Regent Street and much of St James”s – and in various prime retail locations across the UK including Oxford, Exeter, Nottingham, Newcastle and Harlow. In all, the estate’s regional portfolio owns 17 retail and leisure destinations worth £1.3 billion with some 5 million sq ft of space.
Meanwhile, the estate’s regional strategic land portfolio has the potential for some 20,000 homes and at least one million sq ft of commercial space to be developed over the next 20 years.
During 2021/22, the estate undertook capital expenditure of some £63.3 million although this has been much higher in recent years. In London, the estate is preparing to re-start its development pipeline.
The Crown Estate can’t borrow and its business model is based on recycling its existing capital and the formation of strategic partnerships. It has a number of joint ventures, notably with Norges Bank Investment Management (NBIM) on Regent Street. Overall, its regeneration programmes across Regent Street and St James”s have involved £1,500 million of investment.
So-called ”placemaking” is a key element in its strategy and the estate has delivered some 1.5 million sq ft of space in central London over the past 15 years. JLL is the managing agent for the group”s central London portfolio.
Landmark developments in recent years have included 7 Air Street, where the Crown Estate worked with its jv partners including Oxford Properties, HOOOP, and NBREM and St James’s Market, a new office, retail and dining district in the West End.
Today, the estate has a major focus on de-carbonisation (it is aiming to be net zero by 2030) and on making London and the West End an attractive destination. In May 2022, the estate appointed Clare Harrison – previously with Mace and Grosvenor – as its new development director as it looked to ‘kick start its development pipeline in London’.
The group also manages a significant marine estate covering some 95,100 hectares and is currently investing in the offshore renewable energy sector, taking advantage of its role in managing the UK seabed out to the 12 nautical mile territorial sea limit. Today, offshore wind generation across the estate generates enough power for 8.6 million homes, around 12% of the UK’s electricity needs. The estate also manages the Windsor and Rural portfolio involving nearly 200,000 acres of land.
The group has performed well in recent years, helped by the diversity of its business and the relative strength of London”s West End although Covid inevitably took its toll. In June 2022 chief executive Dan Labbad said that The Crown Estate’s strategy involved: “…a deliberate broadening of the role we can play in the UK, and a real drive to identify and realise the potential of both our combined assets and experience to contribute to national goals.”
Financials
Helped by the quality of its portfolio, the Crown Estate has continued to produce resilient results. In the year to end-March 2022, it generated a net revenue profit for the Treasury of £312.7million, up on the £369.3 million seen in the previous year. The value of its property portfolio rose to £15.6bn from £14.4 bn – driven largely by the marine portfolio – and produced a total return of 12%. Overall, the group’s £15.6 billion property portfolio generated revenues of £491million in 2021/22 split between central London (£221.2 million); regional (£102.7 million); marine (£133.3 million) and Windsor & Rural (£33.6 million).
Developments
The Crown Estate’s £7.7 billion London portfolio undertook overall development and capital expenditure of some £31.8 million during 2021/22 in what was a relatively quiet year. Today, the estate is ‘reviewing and repositioning’ its retail and leisure offer and creating more smaller format spaces amongst flagship stores and pop ups. The estate says it is keen to start building more vibrant and diverse local districts, similar to Heddon Street, off Regent St., which has become a popular dining and leisure area.
Today, major developments in planning at the estate include St James’s Market Phase II in the West End and New Zealand House in Haymarket (see Glenigan data below).
It is also providing more managed workplaces across its office portfolio. Last year, the estate completed 129 office deals involving 133,000 sq ft of space; much of it on leasing to new customers.
Today, the estate is seeking to reduce its exposure to retail and grow its mixed-use development opportunities. Its 350 hectare site at East Hemel, near Hemel Hempstead, is the first phase of a wider scheme and has potential for 4,000 homes and some 1.8 million sq ft of commercial space along with schools, a country park and infrastructure.
Meanwhile, the estate’s Cambridge Business Park has been earmarked for a development with potential for 50,000 sq m of commercial space, 500 new homes and 4,500 sq m for new shops, community and cultural facilities.
Marine
Key offshore projects under development on the estate’s marine portfolio include Hornsea 2, set to be the world’s biggest offshore windfarm in the world when complete in summer 2022; the Dogger Bank C and Sofia projects, which are ready to start construction ; the Norfolk Boreas and Norfolk Vanguard projects which have development consent orders for 3.6GW of capacity and the East Anglia ONE North (950 MW) and East Anglia Two (980MW ) projects which have also received development consent orders. Future plans include floating wind in the Celtic Sea, which the estate believes could ultimately involve several billion pounds of investment to Wales and the South West.
Glenigan Data
Glenigan data highlights the variety of the development programme at The Crown Estate. It shows that detailed plans have been granted for the £250 million New Zealand House refurbishment in Haymarket, an office conversion – with retail units – at 80 Haymarket where Stanhope is the project manager and work is set to start in early 2023 and run for 60 months (Project ID: 18270921). Meanwhile in Kent, Glenigan data shows that detailed plans have been granted on the £9.73 million South Aylesford Retail Park Development, where work is set to start in autumn 2022 and run for 10 months (Project ID: 19280886).
Conclusion: Getting set to kick start its development pipeline in London along with mixed-use developments in the regions
The Crown Estate has perhaps the most diverse portfolio of any property institution in Britain with interests ranging from freeholds in Regent Street to the seabed around the UK coast. But the group takes a highly commercial attitude to managing its portfolio. As well as producing a useful surplus for HM Treasury, it has a strong vision of how it plans to develop and enhance its commercial property holdings in the capital. Having seen some major project completions in recent years across the group’s urban estate around Regent St and St James”s, the group is looking increasingly at the development potential at its regional portfolio, particularly for mixed-used and housebuilding schemes. As the manager of the seabed for much of the UK”s offshore wind capacity, The Crown Estate is also set to play a major role in the growth of renewable energy over coming years.
Winning Work with The Crown Estate
The Crown Estate aims to build relationships with suppliers which create value for itself and for the wider market. It works with suppliers and agents to integrate sustainability into its supply chain. Most of the group’s existing properties are managed by agents and a comprehensive list of agents covering each area of the UK is available on the group’s website at www.thecrownestate.co.uk
Contacts:
Peter Amato, Interim Head of Development London & Regional.
Tel: 0207 851 5000
Email: peter.amato@thecrownestate.co.uk
Joe Richardson, Head of Project Management
Tel: 0207 851 5000
Email: joe.richardson@thecrownestate.co.uk