Savills firmly positive on Central London retail
“A pocket of firm, steady growth in an otherwise confused picture”. So says Savills, describing the Central London retail market, which it says remains one of the most resilient markets of its type against a background of economic turbulence.
The firm’s latest outlook for prime retail rental growth remains “firmly positive” across Central London, with average annual growth of 10% per year for the next five years expected for emergent locations such as Oxford Street East, and growth of 5%-6% per year for more established locations such as Regent Street, Bond Street and James Street.
Savills has examined the revitalised Carnaby Street, which it says is the nearest thing that Central London has to an uncovered fashion mall, and where the ‘rental tone’ has moved sharply upwards during the past three years. The firm estimates that the prime Zone A rent in and around Carnaby Street has risen by around 12% in 2011 alone, and notes that the number of available retail units in the area remains extremely low. Together with the undersupply in the “luxury quarter” on the other side of Regent Street, Savills expects rents to rise in 2012 and a further rejuvenation of the Soho retail scene.
Although there has been relatively little rental growth for Soho retail properties this year, retailers remain keen to trade in this area, Savills says, as shown by recent lettings activity. It notes the proposed redevelopment of Berwick Street market and the prospect of a rejuvenated Leicester Square.
In Covent Garden, Savills says the retail offer has been expanded by a more diverse spread of retailers keen to move into the area. The firm notes that Covent Garden Zone A rents have fallen from a peak of £600 per sq ft to around £550 per sq ft on James Street. Savills expects to see the creation of more medium to large retail units in the Seven Dials area and notes that there has also been significant retailer interest in the St Martin’s Courtyard development by Shaftesbury.
