London retail’s appeal is set to continue – Knight Frank
Available retail space remains very scarce in London’s prime shopping areas, says Knight Frank in its Autumn/Winter 2011 research into the capital’s retail property markets. The firm’s survey of 16 key Central London retail streets suggests an average availability level of just 3.9% in terms of unit numbers, and for Oxford Street, Regent Street and Bond Street the figure was almost zero in early July.
The riots during August led to a short-term drop in activity and footfall, but this was primarily in the suburbs, with Central London largely unaffected, Knight Frank notes. The capital is still outperforming the rest of the UK in terms of sales, footfall and general activity, and Central London is still experiencing an excess of retailer demand over supply, it adds.
Knight Frank says international retailers have continued to make inroads in Central London, with traditional high-end locations such as Bond Street remaining key targets and several upmarket brands considering other locations such as Covent Garden. US retailers in particular are showing interest with Victoria’s Secret, Tommy Hilfinger, Williams-Sonoma and Eileen Fisher among the names expected to open new stores in the capital in the near term, it notes.
The continued upward pressure on rents in some locations and a lack of good-quality investment properties mean that prime yields have remained low. Knight Frank says it is a scarcity of stock rather than a lack of interest that has held back investment activity levels. While the firm expects growth in values to slow, it says London’s appeal to occupiers and investors alike is set to continue in the run-up to the Olympics next year.
