Quieter year ahead for Central London retail – Savills
Growth in prime rents for Central London retail property may ease this year, says Savills, as fewer occupational requirements are pursued less aggressively compared with 2012, and void rates rise slightly as a result of the greater number of lease expiries expected this year. However, the Central London retail market does remain one of the most sought-after investment destinations and remains a key low-risk investment, with void rates on key streets remaining exceptionally low. The quieter year expected in 2013 is partly a reflection of the very high costs associated with retail premises on Central London’s prime streets. Savills points out that London is expensive, compared with other international locations, once rents, rates and other operational costs are taken into account: as a result retailers are reluctant to increase their store portfolio in the capital. In addition, the luxury sector – a key driver of demand and expansion in Mayfair – has shown signs of slowing growth. But the declining appetite for multiple stores in the West End could in fact help to diversify the retail landscape and improve opportunities for new entrants, Savills says. More new US retailers are expected to come to London in 2013, and more Chinese retailers could follow the lead of Bosideng. Meanwhile, the best prospects for upward rental growth in Central London this year could be in some “new and evolving” retail locations, the firm adds. New retail pitches are developing the edges of the City, and new shopping destinations are also emerging in the West End, for example at the lower end of Regent Street, and Soho.
