The works at the Palace were carried out alongside a great number of projects designed to turn the surrounding Sardinero area into a seat of the Court. A number of buildings were needed to cater for the recreation of the aristocracy and Court officials that routinely followed the king and queen on their summer visits. Access to the Sardinero area and the Palace was improved by opening Reina Victoria avenue, and three new buildings were projected: a new Casino, the Gran Hotel (now the Hotel Real) and a theatre.

Such an influx of foreign models caused a reaction, and the early 20th century was marked by a quest for national and regional architectural schools. The so-called "Monterrey" style prevailed, being well-received among the haute bourgeoisie. Pardo House is a clear exponent of this trend. The "Monterrey style" prepared the ground for the success of montañés ("highland") regionalism associated with Leonardo Rucabado and his 1911 project "Palace for a Highland Nobleman". As an alternative to the "picturesque", he sought to articulate an architectural language that might recuperate the best of Cantabrian architecture in the 16th, 17th and 18th centuries, in the face of modernist currents. Thus a style appeared that reinterpreted the Cantabrian Baroque casonas (with solanas or sun-facing balconies, porches, coats of arms in stone, broad wings, etc), best shown in residential buildings. A good example is El Solaruco. Regionalism in public buildings used a neo-Herreresque or neo-Baroque architectural language, as in the case of the Menéndez Pelayo Library. Standing at an angle to this building is the Bellas Artes municipal museum, which houses a collection of pictures ranging from the 16th century to the present day. Among these is a portrait of Ferdinand VII of Spain by Goya, and a series of Flemish landscapes of the 17th and 18th centuries, and works by Iturrino, María Blanchard, Egusquiza, Pancho Cossío, landscapes by Salces, Riancho, Casimiro Sainz, etc.