CENTRAL LONDON RETAIL HEALTHCHECK 2018 - Colliers International
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C E N T R A L LO N D O N R E TA I L H E A LT H C H EC K 2018
STRENGTH UNDER PRESSURE It’s indicative of the strength of occupier demand in the Central London retail property market that shop rents rose, on average, by 3% during 2017 – even in the face of continued economic uncertainty and lower levels of consumer spending. London continues to be the destination for international brands – 30 ‘new faces’ arrived last year – while the level of new UK retailers taking space in the capital for the first time was also encouraging. 2018 will be a milestone year for London’s shopping scene. It will hopefully see the opening of the Elizabeth Line which will give much easier access to many of the capital’s shopping destinations. The 1m sq ft extension of the Westfield shopping centre in west London will open, and we’ll also see traffic banished from a large section of Oxford Street as part-pedestrianisation is introduced. The hyper rental growth of the past three years is now at an end, and the level of vacant shops has gone above 2% for the first time in since 2010 – but this is still a void rate which is the envy of most shopping environments. The macro challenges which have impacted all great global shopping cities will remain in 2018 but it will also bring exciting change. C E N T R A L LO N D O N R E TA I L H E A LT H C H E C K 2 0 1 8 2
EXECUTIVE SUMMARY
The diversity and quality of retail brands opening in
the West End continues to impress. 46 new openings
were recorded on the core shopping streets.
Encouragingly, one third of new openings are British.
Over 50% of stores on the core shopping streets are
international brands. We are beginning to see “country
brands clustering” on specific streets.
Jermyn Street retains its position as the most British
street, with 93% of retailers being home-grown.
A decline in international tourism has resulted in a
decline in annual West End sales.
Central London is not immune to the challenges facing
the retail sector – rental growth slowed to 3% y/y to
mid-2017 and vacancy rates have exceeded 2% for
the first time since 2010.
C E N T R A L LO N D O N R E TA I L H E A LT H C H E C K 2 0 1 8 3
ELIZABETH LINE BOOST TO TRADE
2018 will see the long-awaited completion of the Elizabeth Line, a £14.8bn
infrastructure project to relieve central London congestion and improve accessibility.
Ultimately, nine carriage, 200m long trains will have a 1,500 passenger capacity –
almost twice the capacity of standard London underground trains. At peak times there
will be 24 trains per hour.
Trains started operating from The Elizabeth line will be 60 In terms of key West End stations,
Liverpool Street in June 2017 miles long, running from Reading passenger usage of Bond Street
and the roll out will follow the and Heathrow in the west to is expected to increase from a
schedule below: Shenfield and Abbey Wood in daily 185,000 to 225,000. A new
the east. The line will service station entrance is already open
• June 2017: Liverpool Street
41 stations, including 10 new on Marylebone Lane. This will be
to Shenfield (TfL Rail)
termini at Paddington, Bond supplemented by a new gateway
• May 2018: Heathrow to Street, Tottenham Court Road, entrance for the Elizabeth line
Paddington (mainline Farringdon, Liverpool Street, from Hanover Square to alleviate
platforms) (TfL Rail) Whitechapel, Canary Wharf, congestion.
• December 2018: Paddington Custom House, Woolwich and
Tottenham Court Road is also
(Elizabeth Line platforms) Abbey Wood.
expected to process over
to Abbey Wood, through the
The new line will service an 200,000 passengers per day.
new central tunnels
estimated 200 million passengers The eastern ticket hall is already
• May 2019: Paddington per annum, bring an additional 1.5 operational, six times larger than
(Elizabeth Line platforms) to million people within a 45-minute the original and bringing much
Shenfield journey time of central London needed improved access via a
• December 2019: Full through and add an estimated £42bn to new exit adjacent to Centre Point.
service (including Elizabeth the UK economy. The western ticket hall will exit
Line services to Reading) onto a newly pedestrianised Dean
Street for easy access into Soho.
C E N T R A L LO N D O N R E TA I L H E A LT H C H E C K 2 0 1 8 4
THE INTERNATIONAL SHOPPER
Ave rag e Tra nsa c ti on Va l ue ( AT V)
ATV (£) YoY Sales Change
ATV (£) YoY Sales Change
1600 50
1400 40
1200 30
1000
20
800
10
600
400 0
200 -10
0 -20
April May June July Aug Sept Oct
Source: Global Blue
S h are o f Tot a l S a l e s
China UAE Saudi Arabia Kuwait
There has been a slight are visiting, however, Chinese tourists are essential to
50
decline in international are taking advantage of international sales, consistently
40 tourism, which may be Brexit bargains, with the contributing the largest proportion
30 attributed to heightened average transaction value of spend (35% in October 2017).
20 safety concerns in the growing steadily to £1,443 However, more recently, their
10 capital and a gradual in October 2017. share has fallen due to growing
0
strengthening of sterling expenditure from other non-EU
Over the last six months, the
against the major countries. That said, demand
-10 largest contributors to Tax-
currencies since the June from Chinese shoppers shows
-20 Free spend in the West End
April May June July Aug Sept Oct 2016 EU referendum, no sign of waning, with average
have been from China, the
meaning that overall sales spend up 30% YTD to £1,663 in
Note: October 2017 Kuwait figure is estimated UAE, Saudi Arabia and Kuwait.
are down. Tourists who October 2017.
Source: Global Blue
C E N T R A L LO N D O N R E TA I L H E A LT H C H E C K 2 0 1 8 5
BRAND NATIONALITY
London has always been of Italian occupiers can be found, Brand Nationalit y
a prime destination for and Bruton Street, which is
British Italian American French Spanish Swiss Other
home to the largest proportion
international brands 100
of French brands out of our
and that interest is still core pitches, including a UK 80
growing with, currently, debut for luxury leather goods
less than half of stores 60
house Moreau Paris. Its third %
on core shopping streets store opening after Paris and 40
being occupied by British Tokyo, Moreau reportedly paid a
premium to be located amongst 20
brands (46.9%).
the likes of Isabel Marant, Diane 0
Jermyn Street holds its place Von Furstenberg and Paul & Joe.
Jermyn Street
Kensington High Street
Monmouth Street
Oxford Street East
Kings Road
Oxford Street West
Redchurch Street
Dover Street
Conduit Street
Brompton Road
Long Acre
Albemarle Street
Bruton Street
Regent Street
Neal Street
Carnaby Street
Bond Street
South Molton Street
Mount Street
Sloane Street
as the most British street (93%
Vibrant South Molton Street has
of retailers), strengthened
become the go-to location for
by recent additions such as Source: Colliers International
international brands to launch
premium eyewear brand Cubitt
their UK stores, such as Spanish
and shoe connoisseurs Grenson,
fashion retailer T.ba, French
further enhancing the area’s
women’s fashion IKKS and French
position as the home of British Source: Colliers International
pureplay fashion retailer Sezane.
craftsmanship. By contrast,
These will soon be joined by
Sloane Street is dominated by
the major French lingerie brand,
the most prestigious French
Empreinte.
and Italian fashion and jewellery
brands, representing two thirds of During 2017, we have tracked
the street’s offer. 46 new openings on Central
London’s core shopping streets,
Other diverse pitches include
16 of which are British brands.
Albemarle Street, where a hub
C E N T R A L LO N D O N R E TA I L H E A LT H C H E C K 2 0 1 8 6
BRAND NATIONALITY
There have been eight new Marks & Spencer is leaving its New Openings
openings on Regent Street, Covent Garden flagship store
British International Total
reinforcing its position as one on Long Acre in September.
of the leading upmarket fashion The property is likely to be 18
16
destinations in Central London. redeveloped into several shops 14
Debut brands include luxury with new offices above. 12
Italian sportswear label Paul & 10
Microsoft has secured an Oxford 8
Shark, the launch of the H&M 6
Circus flagship store of 22,000 sq
group’s ARKET and Weekday, 4
ft. The property is owned by the 2
the first European flagship
Crown Estate and was formerly 0
from Canada Goose, Asics’
South Molton Street
Regent Street
Kings Road
Oxford Street West
Bond Street
Monmouth Street
Jermyn Street
Albemarle Street
Carnaby Street
Redchurch Street
Neal Street
Sloane Street
Oxford Street East
Brompton Road
Long Acre
Bruton Street
Conduit Street
Dover Street
Mount Street
Kensington High Street
a Benetton store which has
largest store in the world and
relocated to the eastern stretch
a new flagship for British label
of Oxford Street East near the new
Pepe Jeans.
Tottenham Court Road Elizabeth
South Molton Street, Monmouth Line station.
Street and Jermyn Street have
On Bond Street, the former 11,000 Source: Colliers International
each welcomed two new British
sq ft DKNY store at 27 Old Bond
stores, with debuts from handbag
Street is set to become a new
creator Hill & Friends and lingerie
Alexander McQueen flagship
company Beija London.
store. The brand’s current stores
On Brompton Road, the area on Savile Row and Bond Street
adjacent to Knightsbridge will be consolidated into the new
station is currently undergoing store which, it’s understood,
redevelopment, which will will feature fresh product lines
improve the quality of the retail including furniture and interiors.
offer. In 2017, there were two
new openings, one for British
brand All Saints and also a new
flagship store for jeweller Seiko.
C E N T R A L LO N D O N R E TA I L H E A LT H C H E C K 2 0 1 8 7N at i o n al i t y / Ne w Ope ni ngs
Co
OTHER RECENT &
m
t m
S er
Old cia
lS
t
14
PIPELINE OPENINGS
12
St
Oxford 9
10
13
5 4 8
17
11 15
3 1 6 US online fashion label 15,000 sq. ft. flagship store in the
Nasty Gal, which Boohoo K1 development on Sloane Street.
The luxury fashion retailer is the
acquired earlier this
d first of seven brands to join the
Ro
a year, opened a pop-up development, which is being built
on
Sloane
pt 2 on Carnaby Street in from 2018.
om
Br 16 November 2017. The
Premium trainer brand Cruyff,
S
2,700 sq. ft. shop is the
t
which creates sports-influenced
brand’s first bricks and footwear inspired by the
ad mortar venture outside
s Ro legendary Dutch footballer Johan
g 7
Kin of the US. Cruyff, is now setting its sights on
the UK market.
Boden opened a new store on
King’s Road in October, following The former BHS unit on Oxford
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Street saw Polish fashion chain
the success of five John Lewis
concessions. Reserved open in September
2017. Remaining space is to be
David Beckham’s Kent & Curwen
taken by crazy golf operator
has opened a store on Floral
Swingers and new concept
Street in Covent Garden. & Other
Market Hall, which will convert
Stories has also opened on Floral
36,000 sq ft into 25 restaurants,
Street. Skechers is to open on
10 food stalls, four bars, a demo
James Street, Covent Garden.
kitchen and event space.
The Burberry store on Brompton
Road is relocating to a new
z
Note: •– nationality not known
Source: Colliers International
C E N T R A L LO N D O N R E TA I L H E A LT H C H E C K 2 0 1 8 8AVAILABILITY
Vacant floorspace in year following the closure of the Vacancy rates have fallen on Long
Central London has risen Austin Reed, Banana Republic and Acre in Covent Garden, down
French Connection stores. This from 7.5% in July 2016 to 2.0%
above 2% for the first time
has since been remedied by new in July 2017 - the second lowest
since 2010, reaching 3.0% lettings to Lululemon’s flagship, vacancy rate among our sample
in July 2017 (+1.2%). H&M’s two new brands, Arket and pitches after Oxford Street West. Av a ila b ility Ra tes
By comparison, the Weekday, and Smeg fridge’s first However, we expect this to be London Unit Vacancy London Floorspace
proportion of empty units standalone store. tempered by some new space National Unit Vacancy National Floorspace
has increased at a much coming onto the market this year.
Out of the sample pitches that 16
slower rate, indicating Colliers International monitors, So far, Central London seems 14
that it is larger units that Kensington High Street continues to have survived relatively 12
to have the highest vacancy unscathed from political and 10
are more likely to be
rate, at 7.3% of units in July economic uncertainty. Despite % 8
sitting empty. 6
2017. The area is at further risk a slight increase in vacancy
Whilst unoccupied space has of deterioration with nearby rates, they remain well below 4
been constrained for a number of Westfield London’s 740,000 sq the national average of 12.2%, 2
years by buoyant demand, extra ft extension opening in 2018, reflecting the capital’s strong, 0
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
space has recently been released though there are some signs that vibrant and dynamic retail market.
to the market following several the high street is retaliating with
high profile brands downsizing a strengthened line up, including Source: Colliers International
their portfolios or entering Dishoom which opened in
administration. Regent Street November.
saw a temporary spike in vacant
space at the beginning of the
C E N T R A L LO N D O N R E TA I L H E A LT H C H E C K 2 0 1 8 9RENTAL GROWTH
P r i m e Re nta l C ha nge 2 0 12 to 2017
Following three Whilst there has been a general
Fringe cooling across London, some
consecutive years of
areas remain buoyant, such as
Marylebone double digit rental growth
Holborn Knightsbridge, the only area
Covent City across Central London that has maintained double
Soho Garden
(as of mid-2017), rents digit growth since 2016. This
Bayswater
are still climbing, but to a coincides with very strong trading
West End much lesser extent. Over results from Harrods, which has
the past 12 months, rents benefitted from international
visitors taking advantage of the
have increased an average
Kensington weak pound, particularly Chinese
Knightsbridge of 3.0%, fluctuating tourists.
Victoria
across different pitches
The strongest local growth since
within the city.
2016 has been on Earls Court
Chelsea
Rents are readjusting in Road in Kensington, where
several areas which saw Capco’s major regeneration
significant growth last year, project is underway.
including Covent Garden, where
rental values on James Street
increased 45% between 2015-16,
coinciding with the introduction of
61%+ 41-60% 21-40% 0 -20% Charlotte Tilbury.
Source: Colliers International
C E N T R A L LO N D O N R E TA I L H E A LT H C H E C K 2 0 1 8 10PEDESTRIANISATION ON OXFORD STREET Plans to transform part of Oxford Oxford Street is home to 300 Street into a pedestrianised shops, accounting for five million boulevard are set to get underway square feet of retail space and this year, to coincide with the generating an annual turnover of full launch of the Elizabeth line. £5 billion. Despite the anticipated The pedestrianisation project uptick in turnover, some concerns intends to address air quality have been raised about increases concerns, high collision rates in rents following the works, in an and severe overcrowding, as area which already contains some well as improving the shopping of the most expensive retail space experience. in the world. C E N T R A L LO N D O N R E TA I L H E A LT H C H E C K 2 0 1 8 11
FOR MORE INFORMATION
Paul Souber Mark Charlton
Head of Central London Retail Agency Head of Research & Forecasting
paul.souber@colliers.com mark.charlton@colliers.com
Colliers International This report gives information based primarily on Colliers International data, which may be helpful in anticipating
trends in the property sector. However, no warranty is given as to the accuracy of, and no liability for negligence
50 George Street is accepted in relation to, the forecasts, figures or conclusions contained in this report and they must not be
relied on for investment or any other purposes. This report does not constitute and must not be treated as
London W1U 7GA investment or valuation advice or an offer to buy or sell property.
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its licensor(s). © 2018. All rights reserved. 17484You can also read
