Paul Street was once regarded as the ‘ugly duckling’ of our London portfolio. Located between Liverpool Street and Old Street, it was an unremarkable building in a decent location, neither adding much value nor causing real concern.
In different circumstances, it might have been an early disposal candidate.
The picture changed after the pandemic. Office values fell by around 30 per cent, and Old Street’s reputation as the UK’s tech hub weakened as many technology companies contracted.
At the same time, the opening of the Elizabeth Line made Liverpool Street one of the most desirable office locations in London.
Paul Street, sitting closer to Liverpool Street than Old Street, suddenly saw three to four times more viewing interest than comparable assets just minutes away. Its location close to the hugely successful Elizabeth Line had become its greatest strength.
Conventional industry advice was to carry out a full Cat A+ fit out, spending around £120 per square foot on interiors, furniture and finishes.
The argument was that higher specification would achieve higher rents and reduce void periods.
But the numbers rarely added up. Rental uplifts of £20 per square foot could not justify such a large outlay, particularly when lease terms had shortened to two or three years.
Worse still, once tenants moved out, the supposedly ‘brand-new’ space would need to be refitted again, creating a cycle of continual reinvestment for us as landlords.
But Maritime firmly rejected this approach.
We believed the fundamentals of tenant psychology mattered more. Businesses want offices that reflect their own identity, not someone else’s generic fit-out.
What tenants value consistently are the aspects they cannot easily change - the exterior, the communal areas and the overall sense of pride in their workplace.
We therefore committed £400,000 to upgrading Paul Street’s façade and common spaces. The dated yellow frontage was replaced with an attractive black and brick design, while shared areas were modernised.
The investment equated to around £23 per square foot - a fraction of the cost agents were recommending.
The results were immediate. Three existing tenants, all with leases close to expiry, agreed new terms.
Two signed five-year agreements and one committed to a 10-year lease. They retained control of their internal fit-outs while enjoying the benefits of a refreshed, modern building.
A new letting on the ground floor in May the following year lifted the rent roll to £530,000 per annum.
Paul Street demonstrates many of Maritime Capital’s core principles. We rely on data and analysis rather than consensus. We focus investment where it creates real value. And we use our experience of running businesses to understand how tenants think and what they genuinely need.
By resisting the cycle of expensive fit-outs and short leases, we turned a marginal asset into a stable, income-producing building in a strengthening location.
The ugly duckling became a reliable performer - not through following industry fashion, but by questioning it.
