I love living and working in London, and cannot think of a better place to shop in the world than London’s West End.
Nowhere has such a variety of shopping streets and districts. Whether it is marvelling at the size of the jewels on Bond Street, trying out the latest Apple product in the Regent Street flagship, or having some lunch and a catch up with friends and family on Charlotte Street or Marylebone High Street, the scope of the retail and leisure offer is staggering.
Not surprisingly, as the rest of the UK retail market lags post-recession, footfall, from local, national and international shoppers, in Central London remains high. But where is the investor demand coming from? There are three distinct groups competing in in the wider Central London retail investment market:
1. Owner Occupiers
We have seen the likes of LVMH and Prada buy in freehold interests on Bond Street, and Ramsbury and Zara on Oxford Street, to secure representation for the future. We have also begun to see a trend whereby affluent retailers buy a site and then develop a tailored flagship store and office to their occupational needs. This behaviour is being driven by the lack of well configured units on the prime streets of London; as such, in order to be competitive on a leasing basis, tenants are facing eye watering premium payments and 7 digit annual rents. Bosideng the Chinese retailer, located on South Molton Street at the intersection with Oxford Street, being a prime example.
2. London Estate Owners
We have also seen large estate owners actively buying. They are also willing to pay a premium in order to expand their existing estate ownerships in their individual micro-markets, in order to maximise control and management of their current assets. Estate owners such as Shaftsbury PLC, which owns a number of central London ‘retail villages’ including Carnaby and Seven Dials (and has just awarded this double instruction to JLL Central Retail Team), CAPCO, which owns 898,000 sq ft of mixed-use space in Covent Garden, The Crown Estate, which holds almost the entire freehold to Regent Street, and Howard De Walden, which owns Marylebone Village, are prime examples of this.
3. Overseas and Institutional equity
We have also seen money invested in the capital originating from a variety of international sources; Hong Kong, Thailand, Malaysia in the Far East – Italy, France and Spain in Continental Europe, and US Private Equity to name but a few. As Jones Lang LaSalle has reported before, these investors are pumping money into London, targeting a number of different sectors as safe haven assets, which will outperform due to continued rental growth and sustained demand. We are also continuing to witness the UK Institutional Funds target the same assets, although they have been struggling to compete at the competitive pricing levels.