Central London Retail Outlook
The Christmas holidays and buying season are rapidly approaching and the latest 2019 report on the retail sector by Savills reveals that Central London has not lost its appeal for attracting retailers of international brands.
With a pending election and Brexit occupier confidence is causing resistance for domestic brand retailers for opening subsequent stores and also as a result of online sales.
The West End of Londons prime market has had an increase in vacancies have resulted in declines of Zone A rents. In particular is Oxford Street where Savills reports a 15.0% 'softening' for rents within the pat 12 months. With the decreases in rental rates has brought incentives by landlords for potential occupiers but these incentives will probably only be available for the next six to nine months.
For Oxford Street the next three years will see a dramatic change beginning with the introduction of the Elizabeth Line in 2021 with its two interchanges bringing increased spending for the area by 40% or £13.2 billion as of 2022. A public piazza at Oxford Circus for pedestrians and shoppers has received a committal of £150 million for the plan. Pedestrian traffic is expected to be further increased with plans for office, residential and hotel developments.
Two other locations for the West End that have had an increase of 10.2% of new openings since 2011 have been Fitzrovia and Soho. The location has had an addition of nine new submarket opening since January 2018.
Other opportunities for expanding retailers are occurring in other parts of the city with Savills reporting:
"For example, clusters have emerged in the White City/Shepherd’s Bush and Angel/Islington areas. This has been partly facilitated by new developments delivering opportunities but also the relative affluence of the local resident population alongside new office and residential developments effectively increasing local population densities. Some operators are also looking to affluent local neighbourhoods with Psycle having opened its first south London outpost in Clapham last year, with a site slated for Westbourne Grove in December."
However some locations have been overlooked and therefore under supplied including Midtown with five sites and Southbank with seven sites.
"Fifty-seven international brands have opened their first ever London site to date this year (as of November), a number that already exceeds the 55 new openings reported last year, which was also a new peak. With a number of new openings slated by the year end the total could be closer to 65."
"Fashion new entrants continue to account for a significant share (37%) with Soho, including Carnaby Street and wider Soho area, being the top destination this year helped by the influx of streetwear labels. Yet, it has been F&B new entrants that continue to be the most prolific accounting for 44% of all new entrants to date, with the tourist hotspots of Covent Garden and Soho being the top locations. In particular it has been those from Europe that have been most active with three Turkish F&B new entrants."
The forecast regardless of the politics and Brexit uncertainty is expected to be robust especially for international brands as new occupiers in the London market.