Rental levels are at record highs in Central London with some major streets having “virtually no availability,” according to research from property consultancy Knight Frank.
Over the last five years, rents for prime London locations such as Bond Street have risen by 45 per cent – more than double the rate seen for so-called “average” streets such as Edgware Road and Queensway. Elsewhere, Piccadilly is seen as under-rented compared with nearby major streets and offers good growth prospects.
Watchmaker Patek Philippe secured a 1,200 sq ft store on Bond Street for a record £10m, while US fashion chain paid £13.8m for HMV’s lease on Oxford Street in recent months.
The divergence in performance between the best streets and the more “average” locations has been a key trend in the UK since the downturn.
Knight Frank’s recent survey of 18 key London locations shows that vacancy rates average lower than pre-recession levels of 3-4 per cent, with available units being taken very quickly.
The continuing influx of international retailers into London mirrors the latest upbeat tourist data, which shows 16.8m international visitors to London in 2013. While international brands from the USA and Europe, such as J Crew, Victoria’s Secret, Piaget and Fendi still dominate activity, retailers from other parts of the world such as China, Russia, Australia and Brazil are increasingly prominent. Visitors from the USA and France still top the rankings in terms of numbers, while visitors from Asia, Latin America and the Middle East spend the most.
Wealth preservation, cooling measures and low yields in Asian own markets are believed to be the main reasons for retailers targeting London.
Darren Yates, partner, retail research team, Knight Frank, commented: “London’s retail market continues to go from strength to strength, with a long line of retailers and restaurants seeking space and rents still under pressure in both prime and off-prime locations.”