Hackney Mayor Philip Glanville has voiced his ‘extreme disappointment’ at the recent news of Network Rail’s £1.5bn sell-off of its railway arches.
Against a background of concerns that the sell-off could cause a rise in rents for independent businesses operating from railway arches, Mayor Glanville had expressed Hackney Council’s interest in buying the borough’s arches in early August.
However, it was announced on 10 September that a deal had instead been made with property investors Telereal Trillium and private equity group Blackstone.
Glanville said: “We are extremely disappointed that Network Rail appears to be going ahead with the sale of the arches without addressing our concerns and those of [business campaign group] Guardians Of The Arches, among others.
“Small, independent businesses are at the heart of what makes Hackney such a fantastic borough.
“They’re a vital part of the creativity, diversity and vibrancy which Hackney is known for.
“It is precisely these businesses who have contributed to the popularity of the arches as business spaces.
“This will understandably be an anxious time for tenants, and they must be given reassurance about their future as soon as possible.”
Network Rail stated on 10 September that Telereal and Blackstone, who will hold equal stakes in ownership of the arches, have drawn up a tenants’ charter, promising to engage with all tenants and communities openly and honestly.
Glanville added that the council would be writing to the government and Network Rail to seek assurances that commitments made to tenants by the new owners will be cemented in contract, as well as to ask whether any funding would be provided for independent advice and support for tenants.
The council are also seeking an ‘urgent meeting’ with Blackstone and Telereal on their plans relating to businesses in Hackney.
The Guardians of the Arches, which started out as a Hackney tenants’ collective a year and a half ago, and has grown to represent businesses concerned at potential rent hikes by the sale, called on the new owners to engage with the views of the businesses the group represents.
A spokesperson for the Guardians said: “Throughout this process we have sought to ensure that small businesses are genuinely protected so that the arches can thrive.
“We continue to dispute whether selling off the whole estate in one job lot is the best way of supporting small businesses and the local economies which rely on them.
“There is a long way to go in the sale process, but if Blackstone and Telereal successfully purchase the estate, we trust they will follow up on their stated intention to put ‘tenants first’ in their management of the estate.”
The Guardians went on to call for a full and transparent rent and lease audit, as well as the formal recognition of the group as a tenants’ association.
Network Rail announced at the end of 2017 the sale of its commercial property business, claiming this would allow it to “focus on its core business of improving the passenger experience and running a safe, reliable and growing railway and help fund its upgrade plan.”
Network Rail currently leases out 5,500 arches across the country, making it the UK’s largest landowner for small businesses, according to figures from the New Economics Foundation.
Sir Peter Hendy CBE, Network Rail chair, said: ““This deal is great news – for tenants it will mean significant commitment and investment.
“For passengers and taxpayers, it will mean massive, essential improvements without an extra burden on the public purse.”
Graham Edwards, co-founder and chairman of Telereal, said: “We and our partner Blackstone believe that our ownership of the portfolio will provide the supportive environment in which these businesses can flourish on a long-term basis.
“For example, our business plan anticipates investing in several hundred currently disused arches so that they can provide space for more local businesses.”
James Seppala, head of European Real Estate at Blackstone, added: “We are honoured to have been chosen as the new owners of Network Rail’s commercial estate. The portfolio is unique in its character and function.
“We are excited by the tremendous opportunity for us to contribute to the continued revitalisation of the railway arches in the UK, always recognising the role that they play in stimulating economic activity, growth and prosperity, in particular amongst small and medium enterprises and local communities.”