Central London retail to outperform, fringe areas attract attention – Savills
Central London retail property will continue to outperform the rest of the UK this year, says Savills. An Olympics-related bounce in spending is possible in the capital, but the outlook for the rest of the year remains mixed – nevertheless, “Central London remains an island of comparatively strong sales and footfall in the otherwise lacklustre UK retail landscape”.
The market for retail property in the City of London has always been seen as a challenge by some comparison goods and fashion retailers, given its traditionally shorter trading patterns of “five lunchtimes a week”. However, Savills feels that the quality of City retail space has improved sharply with the rejuvenation of Cheapside and the opening of One New Change, and says the tenant mix has widened to be more comparable with other parts of London.
The markets for retail property in City fringe areas offer retailers a mix of residential and commercial neighbourhoods unlike those in the City core, Savills notes, and “the creative occupier base in these areas is proving an attractive target audience for retailers looking to test new concepts or promote new brands”. The most established of these ‘frontier’ locations is Spitalfields Market, while recently Shoreditch – focused on Redchurch Street, just north of Bethnal Green Road – has attracted the attention of several retail brands. Savills says this latter trend is largely due to Derwent’s redevelopment of the Tea Building on the junction of Bethnal Green Road and Shoreditch High Street. The recent opening of the Boxpark pop-up mall next to Shoreditch High Street station will be an important factor in increasing visitor numbers to the area, the firm adds.
However, large multiples are unlikely to be attracted to these fringe locations, Savills says, as “the nature of the stock and fractional ownership common in these locations means that they are on the whole unsuitable for those retailers focused on large formats.” There may be opportunities to consolidate larger ownerships, but attention to management and brand selection will be key to ensuring success.
As Redchurch Street and Shoreditch become more established, Savills says new fringe locations are likely to appear, including Dalston and Whitechapel High Street, boosted by the extension of the East London line and by Crossrail. The Crossrail development will also have an important effect on retail in Farringdon, which is expected to become one of Britain’s busiest stations as the only one to offer a link between Thameslink, Crossrail and the London Underground. “Its relative proximity to St Pauls and London Wall will no doubt drive increased levels of footfall through the area, opening up new retail locations beyond those currently concentrated round the station at Cowcross Street,” the firm notes. Savills also expects the areas around London Bridge and Waterloo stations to experience a retail resurgence following extensive redevelopments.
