“Today, Covent Garden has gone from, you know, what was the Piazza and the surrounding areas, to include Seven Dials so, that in itself is now a super district, you know, there are very few parts of the world that have the sheer variety and depth of retail and F&B in such a small walking distance, that’s quite a unique thing to this area.”
Susan Freeman
Hi, I’m Susan Freeman. Welcome back to our PropertyShe podcast series brought to you by Mishcon de Reya in association with the London Real Estate Forum, where I get to interview some of the key influencers in the world of real estate and the built environment. Today, I am delighted to welcome Michelle McGrath, Executive Director of Shaftesbury Capital. Michelle is responsible for the management of Shaftesbury Capital’s £5 billion property portfolio, including asset management, investment, leasing and marketing across Covent Garden, Soho and Chinatown. Michelle is a member of the Executive Committee. She was previously on the board of Capco and has significant financial and real estate experience having joined in 2014 undertaking a number of senior roles across the business. Michelle is an experienced corporate financier and was previously at UBS Investment Bank, advising companies across the UK listed real estate sector. So now we’re going to hear from Michelle McGrath about Shaftesbury Capital’s exciting West End portfolio, the recent Norges deal and plans for the future. Michelle, good morning. Where are you speaking to us from?
Michelle McGrath
Good morning. I am speaking to you from our head office in Covent Garden today.
Susan Freeman
Brilliant. So, we’ll start just a little bit talking about you and your, your background because I know that you originally intended to be a lawyer and you somehow managed to escape so, tell us a little bit about you and your background.
Michelle McGrath
Yeah, of course. Well I’m from the Ally McBeal generation and always looked at that and really wanted to become a lawyer, it really wasn’t for me in the end and I sort of ended up into, very quickly into the investment banking world where I joined a, a Midwest American investment bank and worked in their investment banking team on the advisory side looking after biotech, healthcare, MedTech companies from IPOs, M&A, corporate broking, things like that so, that’s kind of where I cut my teeth and it was such fun to be part of that and you sort of look at what is happening now in terms of healthcare becoming such an interesting part of the real estate sector and it’s just nice to have had some involvement with that very, very early on in my career from a completely different lens but from there I had the opportunity to then go to UBS which is where I spent most of my, my investment banking career. It was GFC time so it was a, both a terrifying and incredible time to be an investment banker. We definitely weren’t the most liked people on the planet back then but it was, it was a hell of a training ground and I think it’s, it’s a great lesson in that you actually don’t learn much from good markets, you learn from bad markets and that’s where, right in the heart of the GFC, we, UBS who had and still actually have a very large real estate franchise, advisory franchise, where we were involved in the, both the advisory but also the recapitalisation of the majority of the real estate sector and I had the absolute privilege of being part of a very high performance team that was involved in many of those things so, a lot of the, the great and the good of the listed sector I’ve had the absolute privilege of, of working very closely with and being part of their story. One of those companies was Liberty International, which was actually, it was a very, very interesting business and it had, had a large shopping centre arm which was at the time extremely successful and it had this business called Capital & Counties, which really was more around London and it had some assets in the counties but it was mainly a London focussed business that owned two principal assets, one of which of course was Covent Garden and the other was a handful of assets in West London, part of which was Earls Court and we saw the opportunity along with, along with management that actually these two businesses could, could certainly function by themselves and there was a strong equity story for each business to, to trade as a standalone entity and so I had the opportunity to be involved in the demerger of that business and at the time there was a very, very charismatic and entrepreneurial CEO who is still our CEO, who led the Capco business and having seen a very successful demerger, him and other colleagues asked if I would be part of their team and so that was my pathway into, I guess direct real estate from the advisory side so, going from agent to principal effectively and since then the story has very much been one of I think I would call it a, a labour of love as it were to London and the West End and the portfolios that we, we have here.
Susan Freeman
That’s a brilliant story so, when, when was that? When did you join the Capco team?
Michelle McGrath
So, we demerged the business in 2010 and I joined them a few years later, it was around 2014.
Susan Freeman
And what was the portfolio like then and, and what was the vision to change it because I think people forget what Covent Garden was like back then.
Michelle McGrath
Yeah, it’s a great question, I mean Covent Garden was really the principal asset and it was a phenomenal asset really, it was based on the idea that you could put back together the original Covent Garden Estate and it started with a handful of buildings, one of which was the sort of the core of Covent Garden which was the market building and you know really just a few buildings around that and the idea was could you recreate a contiguous estate and very much turn that into, I mean it’s always been an investment opportunity, but can you turn that into a really, really phenomenal place and phenomenal investment and you know I think one of the things that Covent Garden always had was it always had these raw ingredients that were, they’re very, very hard to replicate, you know they’re built on things like heritage, architecture, history, it’s got a lot of infrastructure, connectivity, location and it’s very much a recognised place and I think one of the things that people kind of underestimate of these places is it itself is a brand, so you could travel you know anywhere round the world, you could say ‘Covent Garden’, most people would sort of know what you were talking about so, it had all of these ingredients. I think what had happened over time is it had gone through various cycles as places do and it was sort of at this inflection point where it had sort of really just become a tourist destination and we sort of saw the opportunity to turn that into something that was not only for visitors, domestic tourists and international tourists but also for the Londoner, not just as a shopping and F&B destination but actually as a mixed use destination in its own right. So that, that was all around optimisation of what was here, so that’s the retail, the F&B, the offices and the residential and creating this ecosystem that ultimately results in a thriving place.
Susan Freeman
And it is pretty unique when you think about you know the number of theatres, you’ve got the Royal Opera House, you’ve got I mean so much going on in the area and that is, I mean it must be almost I mean impossible to replicate if you decided to go somewhere else and sort of create a Covent Garden.
Michelle McGrath
Yeah, you’re absolutely right, I mean one of the absolute cornerstones of a place like this, and it is an incredibly high barrier to entry, is just the cultural and artistic cocoon that is actually here. That is a very, very hard thing to replicate and if you look at new places that are emerging and many of them are looking to try and replicate that, it takes time to build that and build that with credibility but Covent Garden has always had that and if you go back into the history of Covent Garden and its genesis, it’s always been many things but art and culture have absolutely been the cornerstone, one of the many cornerstones of its identity.
Susan Freeman
And the scary thing is that we were close to losing the market weren’t we at one stage, it was all going to be pulled down.
Michelle McGrath
Yeah, I think there have been many ideas in you know, not in our ownership, but going many, many years back on what could have been but I think there was, you know, this very much a movement around preservation of, of these sorts of assets and that’s, that’s stood Covent Garden in good stead. Again, like I said, it’s very, very hard to replicate this sort of heritage, culture, storytelling, so to lose that would be a great shame, I think the task for us was always can you create a thriving, relevant, prosperous destination that’s relevant to lots of people whilst celebrating, respecting the identity and I, you know, I do think credit to the business, it very much has done that.
Susan Freeman
What would be really good is if you could tell us a little bit about I mean your role and the, the larger portfolio that you are now managing.
Michelle McGrath
Yeah, of course. So, this company, Shaftesbury Capital, is actually only two years old and we’re the product of a merger of Capco, which principally was the Covent Garden Estate and Shaftesbury, who owned Soho, Carnaby and Seven Dials and we brought this, this together and you know the industrial logic is very sound, you know bringing these businesses together, a very much, they behave in the same way, you will adopt different strategies for different areas but they do generally behave in the same way and our skillset around placemaking, investment, curation is relevant to all of those areas. It’s really exciting so, you know, today, Covent Garden has gone from, you know, what was the Piazza and the surrounding areas, to include Seven Dials so, that in itself is now a super district, you know, there are very few parts of the world that have the sheer variety and depth of retail and F&B in such a small walking distance, that’s quite a unique thing to this area and, you know, we’re in the process of bringing these two estates together, making them look and feel as one whilst celebrating their respective identities because they are slightly different, Seven Dials and main Covent Garden. Seven Dials is I guess Covent Garden’s naughty little brother or sister, it just has its own separate identity and we want to celebrate that, but we do very much see them as one and we think that when the consumer comes here, they think of that as one destination so, you know, how to think about bringing that together through smart public realm, through thinking about the nodal points, the connectivity between the two activations around key corners, making it feel as one holistic place, that’s a really important thing and then, you know, as part of that lies in the curation of it so, you know, every street needs to have its own plan and have its own vision so, again, we spend a lot of time thinking about that and again optimisation of the upper parts, you know people forget that whilst roughly 70% of our business is centred around the, the ground floor, actually the rest of it is, is what happens upstairs and that includes a variety of things, you know we’ve got, we’ve got hotels, we’ve got offices, we’ve got large offices, small offices, residential so, again, how do you optimise that and make that really relevant for the occupier. So that’s, that’s sort of one principal side of us and then you have Carnaby Street and the surrounding streets of Soho that are around it so, it’s sort of more centred around West Soho and Carnaby Street, Kingly Street, that’s where the majority of our ownership is and that’s a hugely exciting opportunity for us so, you know, Carnaby Street has this wonderful history and you know we’d like to see the evolution of that over time and see a balanced approach to retail and F&B on the ground floor but also it’s becoming a much more relevant office destination and so what we’re finding is we’re constantly approached from people who are saying, “hey, you know I’ve been in Mayfair for a long time but I really like this part of town” and you sort of ask them and say, “well what is it about here that you love so much?” and they say, “well, it’s the amenity value” and that amenity value is so important to, to the office occupier and their customers and you know, you sort of, it’s an interesting thing because you, you sort of think well roughly I think the stats are something like a third of the, the workforce is now Gen Z or expected to be Gen Z and something like 40% is Millennials so 70% of both the shopping force and the workforce is around this Gen Z, Millennial demographic and where are the areas that they want to shop and that they want to work so, Carnaby and those immediate streets around it are incredibly relevant to that. And then of course we own Chinatown, not all of Chinatown but some of Chinatown and that’s a, that’s a, it’s such an interesting experience getting to know that portfolio a bit better and what drives it but again, you know that’s characterised by long standing businesses who, who love that part of town and have a strong connection to that area and then you know how do we think about, how do we create that and we want that to be, to continue to be relevant on the F&B scene, it’s largely an F&B location really Chinatown, whereas the rest of our portfolio is much more mixed use.
Susan Freeman
And how closely do you curate the occupiers; the people that go in, because it must be quite important to retain you know the character of, of each area?
Michelle McGrath
I think for us, you know, what you’re trying to ultimately do, in its most simple form, is you try and create these wonderful places, that’s obvious, but you’re looking for, you’re looking for market share, you’re looking to get the best operators, the best occupiers to pay you the best possible rents and believe in what you’re trying to do. It’s one of those things, I think success likes speed so, you have to take a view that in an industry that is so reliant on outsourcing, which parts of it do you want to insource and we’ve always adopted the view that when it comes to leasing, when it comes to anything that touches ultimately sales and market share, we want to own that and own as much of that process as possible. So, we’re, we’re pretty much vertically integrated on those sorts of activities and I think that’s been a key part of our success but I think the other part of it is slightly cultural, which is we really, really believe in the power of great places, we believe in what it is we’re trying to do and I do, I do believe that believing is not, is often half the battle isn’t it, we believe that these places either are or should emerge to be the best places in the world and therefore they should command the best quality of tenants and the best quality rents but you have to deliver the product to service that. So, a lot of our time and energy goes into what is it, what is the sort of area that we’re creating? What is the product that we’re creating? What is the real estate that we’re investing in? Are they relevant? Are those uses relevant? And so we spend a lot of time thinking about that and I think in terms of, you know, you mentioned the word ‘curation’, it’s, it’s such an overused term these days but it’s, it’s hugely relevant, you know, you’re think, you’re constantly thinking about, especially when it comes to ground floor uses, what is relevant from a retail F&B perspective and I think, you know, you go back say 20, even 15, 15-20 years ago, retail was characterised by very long leases, very, very safe, low maintenance income streams, nothing wrong with that but the world’s changed so, it’s faster so you need to be, you need to be set up to be faster in identifying trends, to be faster identifying occupiers and I think if there’s, if I would say that one of the things that set this team apart is they’ve been very fast in identifying what works, what doesn’t work, being really, really proactive and taking things out and moving things around to make sure that ultimately we’re moving these places along in the best possible way, we’re commanding the best possible rents but that’s all predicated on performance of the stores and the restaurants themselves so, I do think, you know, success likes speed so you have to be reasonably fast and reasonably nimble at identifying what is working and move on that quite quickly.
Susan Freeman
And of course social media is so like key now to, you know something can become a sort of TikTok sensation overnight and you know suddenly you’ve got the right occupier or suddenly there’s something that you want to bring in that you hadn’t necessarily thought about before.
Michelle McGrath
Now that’s absolutely right and I think on retail specifically we were an early adopter of digitally native brands and I think in this space you can, you can sort of take one of two views, which is you can wait for demand to reach you or you can go and reach the demand and we’ve always taken the view that it’s better to be doing the latter. Identify what it is you, you like and go and find them and I think when it comes to retail that’s hugely important. And digital plays a big role here so, we chose to invest in that space quite early, both in terms of our own digital outreach, our own digital platform but making sure we were building relationships at a relatively early stage with some companies, you know a good example of that would be something like Glossier who we’ve had a very longstanding relationship and we could see that this was a business that was going to be phenomenally successful and going back to my comment to you earlier of you know success likes speed, we wanted to be the first so, I think in retail the art is not to end up with cookie cutter identikit retailing, the art is to be first mover on what’s cool. So, to do that you have to be prepared to invest in those relationships quite early.
Susan Freeman
For the benefit of our listeners, maybe you should explain what Glossier is and what you did with it at Covent Garden.
Michelle McGrath
I can tell you that having spoken to so many people in our, in our industry and taken them round Covent Garden, they’ve heard Glossier from me but it, it’s just a good example of a digitally native brand that you know there was a sort of view perhaps 10-15 years ago that the cosmetics category wasn’t necessarily something that would, that would do that well purely online, that’s been totally disproven, that was totally wrong, Glossier figured that out very quickly then they used digital like you just said, to really, really promote themselves but it was quite, this is going back some time, we saw that, we liked it and we could see that at some point physical retail was going to be important to their strategy and we built relationships quite early on with them. So they’re, they’re a digitally native cosmetics brand.
Susan Freeman
So, of course the exciting news in the last couple of weeks has been the Norges investment into the Covent Garden Estate and I believe they, they bought a 25% stake, the £570 million which values the Covent Garden Estate at £2.7 billion so, it seems to be a real endorsement of the success of Central London and particularly the strategy that you’re following at Covent Garden but will they be involved in the management of the estate or will you, will you continue to manage it?
Michelle McGrath
Well it’s, it is, thank you, it has been, we’re hugely thrilled with, with the announcement and with the partnership, I mean to, to sort of understand it you have to take a step back to, to the story I told you about how Covent Garden came together and you know having brought it together, having brought Seven Dials as part of a more holistic Covent Garden Estate, it’s of sufficient scale that we’re able to introduce a very high quality and experienced partner, the set up is, is as it’s been announced, which is you know we will retain 75% and we will be responsible for the day-to-day management of the Covent Garden Estate so there’s no change in that respect but very pleased to be partnering with, with such high quality investors.
Susan Freeman
Yes, it’s fantastic and obviously it’s released some, some funds and I wondered whether you could talk a little bit about how you might be deploying the funds.
Michelle McGrath
It’s a good question. Look, it’s a little bit early to talk about exactly what we would do but we’re always on the front foot, you know at a property level we’re on the front foot to look at what are the opportunities that we could reasonably deploy that capital into and you know more recently having sold some assets, we rotated into a relatively large block in Covent Garden which was very much a target of ours and we acquired that and we’ll make a very good return from that so we’re pleased with that sort of investment but for us, you know, first and foremost, Susan, it’s about investing in what we already have so, the cupboard is very full, we have loads of things we can do and things we want to tackle, we’ve got a pipeline of, of opportunities that we know will create value for us, if we can find things that are accretive to that and that meet our requirements and are located in the right places then of course we will consider that on a case by case basis. But yeah, we’re generally, we like to think that we’re reasonably active investors but again, you have to stay disciplined in all markets don’t you.
Susan Freeman
And I just wondered we were both on the Opportunity London study trip to New York in the summer and I just wondered, I mean obviously we went through various developments there, talked to some of the developers, I just wondered whether you saw anything in Manhatton or Brooklyn where you thought oh, you know, that’s interesting, you know they’re doing things that we’re not doing over here or are we sort of very much ahead of the game now?
Michelle McGrath
It was a great trip wasn’t it, it was you know you see what’s happening, it’s always important to see what’s going on in other cities and I think you know London’s, cities move in cycles, London has always evolved and it continues to evolve, I think for me the key theme that you, you learn from pretty much every major city is you just cannot beat urbanisation and it always makes me, makes me smile which I, when I hear sort of negative commentary about London or even negative commentary about parts of London because this is a growing city, it’s a global city, the pace of some of those things might change but the fundamentals generally don’t. This is where the majority of jobs and opportunities will be created, this is where the majority of people want to live so those sorts of fundamentals are incredible drivers for real estate and going back to the urbanisation theme, what it, what it sort of tells you is there are so many untapped parts of London and you know, I think those who, who can see those opportunities and adopt a master planning approach and believe in the strength of London generally speaking, London has shown itself to be very, very resilient and very reliable as a place to put your capital and you look at Covid for example, you know London has bounced back phenomenally well from that, certainly from an occupational perspective and I look back at our own portfolio, you know we came out of Covid with almost no vacancy whatsoever and sales, as soon as people were able to trade again, sales for all of those things, they came back very, very quickly so, cities like London, they show their resilience time and time again, I think you cannot beat urbanisation as, as a structural and longstanding theme and you know, New York has done that very well. It’s quite interesting because when we were out there in New York you know there was, there was some chat that oh people are leaving the city, people are leaving the city and things like work from home were, were having a little bit of a, of an impact and it’s very clear that a lot of those things have since, are unwinding or they have since unwound and you know, work from home, you can, you could talk about that for a long time but there’s no question that no matter which way you cut it, the benefits of working in an office with people and learning from people for ideas, for inspiration, for creativity, they far outweigh simply just working from home so, you’re seeing people come back to the office, you’re seeing organisations recognise it’s important to come back to the office and that’s, that’s been a great thing for New York and you know when we speak to our, our customers who have shops or restaurants out there, they are absolutely full and they are doing pretty well. There’s clearly some macro themes playing out in the US at the moment but that’s a sort of different story, but generally speaking, our customers who have operations out there, whether it’s offices, retail or F&B, they all tell us the same thing which is things feel pretty strong.
Susan Freeman
And actually the amenities that you’re providing in your portfolio are part of what brings people back to the office because they’re not just coming to sit in an office, they’re coming to actually you know get the entertainment and the sort of after work activities that you provide.
Michelle McGrath
Yeah, I think that’s right and you know it’s like I said, if the stats are right and something like 70% of the workforce are Gen Z or Millennials then we know what those demographics value, they’re incredibly digitally connected, they value experience over many things, they generally speaking have more disposable income than the generations before them for a multitude of reasons and for them place matters, place matters beyond just the box that they’re working in so, all of those things need to work alongside each other so, you want great places with great amenity value, retail, F&B and fantastically constructed offices.
Susan Freeman
And obviously you and your team are forever sort of looking you know for new inspiration, looking online, looking in other cities, what are the new trends that you’re seeing that we’re going to be noticing over the next couple of years?
Michelle McGrath
Well, I think, I think there are certain things that are only going to go from strength to strength and the digital economy is, is just a structural part of, of retail and F&B now and I think you want to work with businesses that understand that, that are able to participate in strong digital outreach that adopt a multi-channel approach but alongside that it’s more important than ever to make sure that the experience of what is being presented is extremely strong and unique and personalised. And that speaks to many things so, for us those two trends are absolutely paramount so when we’re speaking to people, we’re looking at how are you investing in your business’s multi-channel, how are you investing in the digital economy and what’s your take on what is a high quality retail and/or F&B experience look like? And then there’s one or two others, I think, you know, watch out for autonomous retail so, that retail that is just so, so tech forward, so technologically reliant, you can walk in, you can walk out on a ten year view, we’re likely to see more of that, so it will be interesting to see what brands adopt that and how that plays out. But the other thing you know I would say is, anything centred around wellness and wellbeing, you know I think that’s, that’s again not just a short term trend, I think that’s a long term trend, so anything that speaks to longevity, to wellness, to wellbeing and that applies as equally in the retail and F&B sector as it does to the office sector so, you know how people feel in their, in the workspace that they’re in, how people feel when they’re shopping the product that they’re buying, what are they using, it speaks to the category, it speaks to the experience to the product. So those sorts of things are very much front of mind and, and like I said, I think you know when you think about who is your customer and what are you providing? Gen Z and Millennials are, are an incredibly important customer base so you are curating largely with them in mind so, you know you have to create relevant, relevant product, especially in areas like Soho and Carnaby which generally speaking have tended to skew a slightly younger consumer both in terms of the shopper but also the office occupier.
Susan Freeman
You must collect so much interesting data on you know what, what people do on the, on the estate, you know, where they go, where they spend their time, you know, which parts they don’t go to, that must be absolutely fascinating.
Michelle McGrath
We’re learning, we have, we have a lot of data but never as much as data as we would like. So, we’re learning and I think things like AI and, and as tech advances will be very helpful to that but you know, you learn a lot, you learn a lot about how people move through the West End and at one point it was quite interesting but we were looking at the way Seven Dials interacted with main Covent Garden and you know every year you have 45 million people who walk through Covent Garden but something like only 10% of them were also moving from main Covent Garden into Seven Dials, so that’s a very interesting fact to know and then you’ve got to think about how you change that and how you improve the permeability and I think real estate plays an incredibly important part in that, you know the more you can do from a master planning perspective to create permeability between places, between buildings, between streets, make the pathways easier, you will improve that flow and as you improve that flow, time and time again we are shown that footfall increases, sales increase, occupational demand across every single level, you know especially retail and F&B increases, the desirability of the place increases so, you know, getting those sorts of data is very helpful in the investment decision making that you’re making and also the sort of place shaping decision making that you’re making. But you know we’re learning a lot and I think now that we’ve brought the two businesses together, there will be plenty more opportunities to expand the data that we have.
Susan Freeman
And do you use apps to tell people about what’s going on in different parts of the estate to you know encourage them to sort of try new areas that they’ve not been to before?
Michelle McGrath
Yeah, I mean apps, those sorts of apps have, have been around for some time. Alighting on the right sort of platform I think is going to be important for us and I think it’s quite interesting when you think about, when you sort of think a bit about the future of real estate and you think about some of the things that are either sort of language based or paper based, standardisation, automation, technology, AI, as the years progress and I think it will happen faster than we, we probably assume, they will be very helpful in doing what you’re alluding to, which is ultimately communicating with your customers as fast as possible and in the most meaningful way possible and that will create opportunities for businesses like us because it will mean you become more efficient at things like you know your operations, property management for example or your marketing activities and long term you have to believe that will hopefully foster not only margin but creativity.
Susan Freeman
And by their nature I mean quite a few of your, your occupiers are, are small independent businesses, I mean obviously they are being hit by business rates, utilities, all sorts of costs so, as part of your sort of management are you spending quite a lot of time, you talk to them about how they manage their businesses and manage these costs.
Michelle McGrath
Yeah, I think that’s right. They’re, you know, you have to, when you’re working in a place like this and you’re creating the places we have, your customers are so, so wide and so varied, you know we will do business with everyone from an Apple all the way to a, you know, a small say stationery shop and the same goes for the office occupier for example. So, you have to, you have to work with all of them, I think there are some additional occupancy costs that are coming through NI and some of the business rates changes, I think it underscores more than ever why you have to be very much focussed on high quality curation, high quality management, high quality execution, introduce the best type of retailers and F&B brands that are capable of sustaining high densities and high margins to, as much as possible, buffer the impact of, of what is coming, you clearly cannot control everything but I have to believe that if you, if you’re focussed on, like I said right from the outset, sales, market share, high quality places that foster demand, then everybody will prosper and people will be, your occupiers will be able to see their way through some of these times.
Susan Freeman
And I love the fact that a lot of what you have on the estate is interactive and I was looking at the Chanel Rouge Coco Playground, I mean I didn’t actually get to see it live but it seemed to involve skateboarding as well, which was rather interesting.
Michelle McGrath
Yeah, we, we’ve always felt that, again it kind of goes back to the comment I made earlier, which is you have to create an environment that is different, that is differentiated and find ways to connect, connect with your consumers and you know we all travel the world these, well, a lot of people travel the world these days but travel is more accessible than its ever been and a lot of these places are starting to look the same so you have to, you have to sort of look at what can you do to make them feel different and interact with you differently so, we’ve always felt there’s a place for what we call ‘activations’ and they are the events that ultimately that we put on, on the Piazza and again, going back to my comment earlier about being vertically integrated, we like to do those, those things that outreach ourself and there’s a real value to that so, we see, you know if you go back to really Covent Garden and the Piazza, which is the Chanel installation that you’re talking about, we see it as very much a playground, it’s a playground for expression and you know the brands that we, we either outreach to or they outreach to us, they absolutely recognise that opportunity and you know like I said, you’ve got 45 million people who walk through here every year, a very diverse demographic, so the ability to spill out and communicate with them is vast and it’s quite a unique opportunity because their aren’t many parts of London that you can do that in so we can do that because this is largely a pedestrianised environment and parts of the Piazza are, are privately owned so we’re able to put on a show as it were, but those have been very successful and you know we’ve got a, an incredible team who are dedicated to doing that and they have a long list of people that they want to work with and, and they build relationships over the time, you know, whether it’s Chanel or Dolce & Gabbana or Diageo, Unilever, people like that, we, we’ve done all sorts with those and we build those relationships over time but there’s real, they recognise there’s absolutely real value to connecting with the consumer by spilling out of a physical store and places like Covent Garden give you the opportunity to do that.
Susan Freeman
And 45 million people, I mean that is huge, there can’t be many other parts of London or in fact parts of other major cities that get that many people.
Michelle McGrath
Yeah, it’s one of the top footfall destinations, yeah, absolutely.
Susan Freeman
And actually, the pedestrianisation is so important because you know you compare the experience of sort of walking around Covent Garden, Seven Dials with the experience of walking along Oxford Street for instance, I mean it’s, it’s very different if you don’t have to dodge cars and buses.
Michelle McGrath
Yeah, yeah. Look, I think lateral retail has different characteristics to what we have or what we’ve tried to create and you now it’s a, it’s a great lesson in, in urban regeneration and city management and all the rest of it that pedestrianised locations, they do create destinations so, you know Covent Garden was always an organically pedestrianised place, the Piazza was designed with people in mind, not cars and we’ve always taken the view that the streets that lead onto the Piazza would benefit from pedestrianisation and things like alfresco, anything that creates a better environment and look, the consumer has really responded to it and I think in a, in a world where, you know going back to health and wellbeing and things like that, the safety, the walkability, it’s a brilliant part of London to spend your time in but you know as importantly, it’s a great place to want to trade from and so what we’re trying to do is, it's one of those things isn’t it, “my customer’s customer is my customer”, is let’s create a place where consumers want to dwell and spend their time and our customers will benefit from that and you know, one of the key successes of Covent Garden was when we first came on the scene, Covent Garden’s dwell time was something like sub an hour, today it’s three hours, well why is that? It’s, it’s because of the curation, it’s because of the uses, it’s because of you know the increase in pedestrianisation that we’ve brought to this estate. And what I would say, pedestrianisation doesn’t work for everything, I think sometimes it’s sort of seen as one of these, these things that’s like a magic fix-all but actually, cars bring energy, they bring an energy of their own, it’s just about how the overall place is presented and how it functions.
Susan Freeman
I’m so pleased you said that because as, as a driver, I’m always made to feel bad but one of the things I wanted to ask you, as a woman who is working successfully in the real estate sector, have you found it surprising that there aren’t more women coming up through the ranks?
Michelle McGrath
It’s a great question. I don’t quite know why there aren’t many women right at the top. What I can tell you is that the ones, there are some and they are brilliant. I would say that, you know and I’d say this to any, women and any underrepresented group, which is I wouldn’t adopt a victim mindset about it, I think you have to just focus on doing your best, working hard, good ideas, good analysis, good creativity and just focus on you, you do you, it’s one of those, you know, you just work on being the best and I have to believe that talent always finds a way to come through so, so I guess my message to anyone who wonders about that is I would simply say focus on talent, just focus on talent and when you focus on, on true talent and you give them the opportunities, the best people come through and whether they’re an underrepresented group or not, you just want the best people in the best jobs. And you know it’s, it’s interesting, again when you think about the future of our industry and you think about you know what does AI, what does technology do to an industry like this, you sort of have to believe that the premium in the future is going to be on ideas, it’s going to be on entrepreneurialism, it will be on creating opportunities because so much of what some of these businesses do will eventually become automated so, you want the best people in the best jobs that are going to position you as one of the best companies in the future, that’s I think all we should focus on.
Susan Freeman
I think that’s right and as our property futurist, Anthony Slumbers says, a human is going to be the new luxury because there is going to be so much that is done by AI and programmes that people will really appreciate much more you know the sort of human side of this and the human creativities and it will be interesting to see how that works out. And since you’ve been involved in, in real estate, I mean has it, has it changed? Do you think it’s still sort of very much the same in terms of the people that are involved or are we actually getting people in from different types of backgrounds, which is what we’ve been trying to do?
Michelle McGrath
I think there’s definitely more of a recognition that the industry could be more outward and you know, we’ve seen that with our own programmes so, I think, I think it has changed actually and I have to believe it will continue to change and that will just create a better, stronger, more dynamic, more nimble, more interesting industry that will adapt and position itself for success in the future so, I’m glass half full on that, not glass half empty and again, I sort of, I have to believe that talent always wins.
Susan Freeman
One of the things that I think you’re able to, because your, I don’t know whether you call them villages, locations, you know, are, are at the cutting edge of what’s new but have you been able to experiment because you know real estate isn’t generally very good at experimentation, people worry about you know things going wrong. Have there been things you’ve been able to experiment with and if something doesn’t work, are you able to then move onto the next thing?
Michelle McGrath
I think in any business and any team, experimenting and learning from, you can call them mistakes with a small ‘m’ but experimenting and learning is paramount. And I think, you know, I said at the beginning, you learn nothing from, from good markets and in a way you learn nothing from continued success, you learn from things that go against you so, that’s a good thing. It’s the old adage; just don’t make a habit of it. So, yes, we have experimented, there are things, I like to think we get most things right, every now and again you experiment, it doesn’t work, it, you know so long as you do it for the right reasons, that’s okay, you know when you have a business, you know we’ve got 2000 units so when you have a business of this scale, there will be things that don’t always go to plan, that’s okay, it’s how you, how you think about it, how you respond to it, how you deal with it, how you pivot or how you respond, all of those things so, so absolutely and there’s one or two examples of specifically in the retail space, you can play it safe with retail but you know in retail safe is risky so you have to be prepared to take a couple of risks and you know there’s probably one or two examples where I can remember where we’ve, we’ve maybe signed someone and it just hasn’t worked, doesn’t matter, you learn something from that, you learn something about your, your customers, you learn something about your consumer, you learn something about the businesses that you, you want to work with, every now and again there’s been a business perhaps backed by a celebrity which perhaps hasn’t worked but you learn something from that experience and you move on, I think it’s, it’s about, like I said mistakes with a small ‘m’ and they’re healthy, they’re a good thing, you learn from them and you just move on and you become better.
Susan Freeman
Yeah, because safe can be boring. So, has anybody been like a role model or a particular inspiration to you?
Michelle McGrath
I think there is no one individual because there are far too many and I’ve been extremely lucky in my career that I’ve generally worked with people far smarter than myself and I’ve learned so much from all of them. I’ve, like I said at the beginning, you know when you, as a young banker when you’re working in an investment bank and you are exposed to such high quality management teams, and our sector has, it has some brilliant management teams, you know you’re exposed to them and you know you sort of see the way they think and what they talk about, that’s, you’re very lucky to see that and to, to be part of it. So, you know, there’s too many to mention almost. I would say that you know inspiration can come from many places and you know I look at the business that I’m in today and the relationships that I’ve had, the opportunity to build both externally but in a way more importantly internally and the team that I get to work with who I really think are a worldclass team so, they’re great, we’re an intuitive team, there’s great chemistry, I learn something from them all the time and we’re always pushing ourselves and each other to be better so, I think like I said, the inspiration comes from many places, too many to mention, Susan.
Susan Freeman
Is a good answer. And assuming you have downtime, how do you spend it? Are you out shopping and going to restaurants or are you getting as far away from it all as possible?
Michelle McGrath
No, I, I have the downtime I need. I can tell you, having tried to do this so many times, I’m pretty much the world’s worst cook so, that, I’ve tried, you know even during the pandemic I think everybody was making banana bread and I, I seem to have made the worst banana bread so I failed at that, but I generally spend my time, I have a daughter so motherhood has been incredible for me, I love being a mother, I’m incredibly privileged to be a mother so, I spend a lot of, as much time as possible with my daughter during my downtime but I think alongside that it’s important to, to create some head space so, I like meditating, I like Pilates, travel, all of those things, you know, things that just make us human.
Susan Freeman
That’s great and I’m pleased you said that about the cooking because I also don’t think I have the cooking gene.
Michelle McGrath
No judgement here.
Susan Freeman
Michelle, thank you very much, that is great and I will continue to enjoy wandering through Covent Garden.
Michelle McGrath
Anytime, thank you for having me.
Susan Freeman
Thank you so much, Michelle for taking the time to talk to us about how you go about creating the vibrancy that makes Covent Garden, Carnaby Street, Soho and Chinatown destinations of choice for Londoners and tourists alike.
So that’s it for now. I hope you enjoyed today’s conversation. Please join us for the next PropertyShe podcast interview coming very shortly.
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