West End retail space in demand with surge in refurbishments and “rebased rents”

Retail space in London’s West End that is currently under redevelopment has leapt to 101,000 sq ft from 31,000 sq ft recorded in pre-pandemic December 2019, 49% up on the five-year average.

Flagship stores housing global brands have been “less impacted than others”, according to new research from property company Colliers, and shopping ‘destinations’ such as Bond Street, Regent Street, King’s Road and Long Acre have remained resilient despite an obvious ‘pandemic hit’ to London’s key retail destinations.

That’s been especially apparent on the King’s Road where a void rate was only marginally up from 5.3% in 2020 to 6.6% in 2022, and the Duke of York Square was 100% occupied.

Kensington High Street has seen a bigger hit, with a rising void rate up to 19.3% in 2022, compared to 14.5% in 2020, but that has been attributed to the local affluent demographic of the area and the work from home environment. However, Colliers notes a resurgence in new lettings as brands take advantage of rebased tents, with the expectation of a surge in footfall as local commuter and international travel increases.

Regent Street shows a void rate decline from 10% to 8.4% that occurred in the second half of 2021. Pitches reliant on local workforces are harder hit, and in reaction some retailers have reduced or changed opening days and hours to capture the highest rates of footfall.

Cheapside has been hit hard with the void rate rising from 3.4% in 2019 to 24.8% in 2022, but Colliers anticipates that Cheapside and other locations in the city of London will recover rapidly as the movement of workforces back into the office “continues apace”.

Paul Souber, Head of Central London Retail at Colliers, said: “The retail void rate in central London can’t be explained by one factor, as each pitch has its own character and mix of brands. One thing that has contributed, particularly on Oxford Street, is the loss of the department store. While these are being redeveloped, the projects will take time and as such will keep the headline rates high.

“Elsewhere, void rates need to be managed with great care to ensure that the right occupier is put in place that compliments the location - be that a pop-up, new entrant or a brand looking for the right size of space.”

Walter Boettcher, Head of Research and Economics at Colliers, added: “While void rates remain generally high, movement looks to be in a positive direction. The surge in refurbishments across the pitches bodes well, providing opportunities for new market entrants and the possibility of repositioning high streets generally. Despite an obvious ‘pandemic hit’ to London’s key retail destinations, punctuated by ubiquitous pop-up shops, few signs of a lasting upheaval are evident.”