A ‘robust and steady’ recovery for London’s retail market is in store, with times expected to remain ‘tough’ until a ‘real economic recovery begins in the UK’. This is the view from Savills’ latest Central London Retail Briefing.
The global real estate services provider pinpoints three shopping streets as being integral to recovery.
The first is Oxford Street. Currently in the middle of a huge regeneration, Savills see it as a ‘core’ retail location. Extensive refurbishment, delivering improved visitor access via stations at Tottenham Court Road, Oxford Circus and Bond Street, has been met with approval.
Commercial property rents have risen over the past six months, resulting in Zone A pitches now commanding £300–750 per sq ft. Voids remain low, stimulating the market further. The two new retail additions at each end of Oxford Street are predicted to have a knock-on effect on the surrounding areas.
Retailers and commercial property developers are expected to respond by seeking out the next secondary pitches, possibly around Tottenham Court Road and Charing Cross Road.
The second shopping street Savills sees as integral to recovery is Regent Street. This destination has positioned itself ‘as the preferred location for quality fashion retailing’, says Savills. Zone A rents go for £350–500 per sq ft. Voids are low here and, as the market ‘tightens further’, it is envisaged that rents could attain ‘the same levels or higher than Oxford Street’.
Bond Street completes the commercial property trio. Apparently a complex character, Savills ascribes it values that ‘remain difficult to understand without expert micro-market knowledge of the street’. Void rate is ‘effectively zero’ for a site attracting luxury retailers, who pay £250–1000 per sq ft. Future forecasts are that high commercial property demand will lead to ‘the evolution of a wider luxury district in the area’.
The overall commercial property outlook is for Central London expansion, rejuvenation and an ‘upwards’ path for rents and premiums – something that should bring a smile to the face of any commercial property owner or investor, though a small tear to potential landlords’ eyes that even in these economic times rents should be predicted to rise.
Previous Post
Restoring London’s Riot-torn Commercial Property
