2022-11-18-莱坊-Central_London_Retail_Market_Dashboard_Q3_2022_2页_736kb

Central London Retail Market Summary Q3 2022

Core Content

The Central London retail market in Q3 2022 showed signs of recovery, driven by increased consumer activity and a strong rebound in tourist numbers. Despite the broader economic challenges, the market remained more resilient than other parts of London, particularly Outer London.

Main Points

• Shopper Activity:

  • Shoppers returned to stores, with a significant reduction in pandemic-induced screen fatigue.
  • Shopper mobility was still 28% below pre-pandemic levels but improved from January levels by 49%.
  • The West End and Midtown areas saw stronger rent growth compared to Outer London, at +0.3% and +0.4% respectively.

• Lettings Activity:

  • Lettings were buoyant, with many occupiers actively acquiring space.
  • Notable lettings included:
    • 23,000 sq ft to Cynergy Bank at One New Change
    • 5,000 sq ft to Digme at 40 Coleman St
    • 800 sq ft to Samsonite at The Royal Exchange
  • The West End and Midtown were the main focus of investment, with a total of £513m in deals.

• Investment Deals:

  • A significant acquisition was 51–54 Long Acre for £32m by NFU Mutual, a rare freehold opportunity in Covent Garden.
  • Other key deals included 52–53 Dean Street for £1.8m and 5 d’Arblay Street for £3.2m.
  • Yields remained stable across key areas, with Bond Street at 2.75% and Oxford Street at 3.50%.

• Market Performance:

  • Capital values declined by 1.9% due to the wider downturn in commercial real estate sentiment, but were more resilient than Outer London (-2.9%).
  • Sales in the West End outperformed footfall, with YTD sales up 109% YoY, showing more purposeful consumer spending.
  • Footfall in Central London improved for the first time during the October half-term, reaching +3% compared to 2019 levels.

• Economic Outlook:

  • The market is expected to return to growth by 2024, with West End rents forecasted to rise by +1.5% between 2023 and 2026.
  • The UK retail market is projected to grow by +20% to reach £10bn in sales by 2024.
  • The Autumn Budget introduced a reform of business rates, which is expected to reduce the tax burden on retail premises and stimulate demand from international brands.

Key Information

• Sources:

  • Data from PMA, Knight Frank, EGI, Property Data, and MSCI.
  • Mobility data from Google Mobility.

• Geographical Highlights:

  • West End: Strong rent growth and sales performance.
  • Midtown: Second to the West End in rent growth.
  • Covent Garden: Notable freehold acquisition.
  • Oxford Street & Bond Street: Stable yields and strong market position.

• Market Sentiment:

  • The market is more resilient than the wider UK and South East regions.
  • Positive revisions to forecasts indicate confidence in the long-term recovery of the retail sector in Central London.

Contact Information

For further details or inquiries, please contact the following experts at Knight Frank:

Important Notice

• This report is for general information only and not to be relied upon.
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