Shop vacancy rates in London’s upscale shopping districts are at their lowest level since 2019. This is good news for landlords who have been hit by a wave of shop closures during the coronavirus pandemic.
According to a survey by British real estate agent Savills, the vacancy rate on London’s main shopping streets, Oxford Street, Bond Street and Regent Street, in the third quarter was 40 basis points (bp=0.01%). reduce.
Through the so-called “Company Voluntary Arrangement (CVA)”, it was possible to reduce rents to support retail stores, which led to a market recovery. Thousands of stores have closed over the years during the coronavirus pandemic, and store valuations have plummeted.
Blackstone, the world’s largest asset management company, acquired the New Bond Street property in April for 230 million pounds (about 45.5 billion yen). This reflects the company’s refocus on brick and mortar retail.
Marie Hickey, director of research at Savills, said Finance Minister Reeves’ budget announcement this month was one of those for retailers. He said that policies such as increasing the employer’s share of national insurance premiums “could reduce competitive tensions somewhat, as they could affect costs and profit margins.”
Still, he said demand for space is expected to continue as tenants continue to focus on securing long-term leases in prime locations.
Graham Barr, head of UK retail at US commercial real estate services company CBRE Group, said flagship store rents in Oxford Street had risen sharply over the past year.
“As online retail continues to grow, the focus on improving the in-store experience is outstripping supply in some areas,” said Barr.
October CBREreportRents on New Bond Street, home to luxury fashion brands such as Chanel and Gucci, have tripled since 2010, according to the report.
Original title:Prime Retail Vacancies in London Drop to Lowest Level Since Pandemic(excerpt)
Interview Between Time.news Editor and Marie Hickey, Director of Research at Savills
Time.news Editor: Thank you for joining us today, Marie. It’s been quite a tumultuous time for retail in London, but your recent report shows some encouraging signs. Can you tell us what the current shop vacancy rates are in London’s upscale shopping districts?
Marie Hickey: Absolutely, and thank you for having me. As of the third quarter, shop vacancy rates on key shopping streets like Oxford Street, Bond Street, and Regent Street have decreased by 40 basis points. This is the lowest level we’ve seen since 2019, which indicates a positive shift in the retail landscape.
Time.news Editor: That’s great news, especially after the significant challenges posed by the pandemic. What do you attribute this decrease in vacancy rates to?
Marie Hickey: One major factor has been the implementation of Company Voluntary Arrangements, or CVAs, which have allowed many retailers to renegotiate their lease terms and reduce rents. This has provided much-needed financial relief and stability, fostering a sort of recovery in the market. Many retailers that had closed during the pandemic have been able to reopen or pivot effectively, which is heartening.
Time.news Editor: The pandemic indeed caused a wave of closures. It must have been challenging for landlords and retailers alike. How has the property market adapted to these changes?
Marie Hickey: The market has shown remarkable resilience, primarily through strategic adjustments like CVAs. Additionally, there’s been a noticeable refocus on brick-and-mortar retail from prominent investors. For example, Blackstone’s acquisition of a property on New Bond Street for £230 million signifies not only confidence in the physical retail space but also a belief in its recovery potential.
Time.news Editor: Speaking of investors, how do you see the future of retail properties in London evolving in the coming months?
Marie Hickey: We’re cautiously optimistic. While the recovery is evident, there are still challenges ahead, such as shifting consumer behaviors and the ongoing impact of e-commerce. However, as long as retail spaces continue to adapt—be it through experiential offerings or enhanced in-store services—we expect gradual improvement in vacancy rates and property values.
Time.news Editor: It sounds like a balancing act between tradition and innovation. Are there particular sectors in retail you believe will thrive as we move forward?
Marie Hickey: Yes, sectors that emphasize experience, such as food and beverage, wellness, and luxury brands, tend to draw consumers back to physical stores. The demand for personalized experiences and social interaction will be key drivers. Additionally, retailers that leverage technology to enhance in-store shopping can set themselves apart in this competitive landscape.
Time.news Editor: Very insightful, Marie. Before we wrap up, do you have any advice for landlords and retailers trying to navigate this shifting market?
Marie Hickey: Absolutely! Flexibility is essential. Landlords should be open to renegotiating leases and adapting spaces to meet new demands, while retailers need to focus on understanding their customers’ evolving needs. Collaboration and innovation will be crucial in overcoming the remaining hurdles as we continue to recover from the pandemic’s impacts.
Time.news Editor: Thank you so much for sharing your insights today, Marie. It’s always a pleasure to discuss the dynamic shifts in London’s retail environment with such an expert.
Marie Hickey: Thank you for having me! It’s been a pleasure.