Big changes are happening in London – both short and long term – and retailing is having to adapt. Ben Cooper reports on the capital’s new up-and-coming shopping areas.
London boasts some of the most exclusive luxury brands in the world, is home to cutting-edge alternative art and fashion, attracts millions of tourists from all over the globe, and has some of the best shopping in the world. Many might say it has it all. And from a retail perspective, London continues to evolve.
With demand for prime West End sites continuing to outstrip supply, retailers have to think more inventively about where to position stores so they can capitalise on consumer spend. And that means new retail hot spots on the horizon. Other factors such as transport project Crossrail, and the redevelopment in east London because of the Olympics, will continue to create retail opportunities. What’s more, London’s residents and its visitors are receptive to change. “It’s interesting quite how mobile the consumer population of London is,” says Robin Bevan, director, retail locations and shopping centres for retail consultancy Javelin Group. “People are prepared to dispense with more obvious choices to try something new.”
So how is the London retail property scene changing? While Oxford Street, Regent Street and Bond Street all put the West End high up the table in the worldwide ranking of shopping destinations, the high demand for space has sent rent in the area to astronomical levels. Some believe the impending Olympics is fuelling the fire. Brands from around the world are lining up to cash in on the huge profile-grabbing opportunity as media and tourists from around the world descend on the capital. Paul Souber, director of retail property consultancy Briant Champion Long, says: “Lots of retailers want to have a presence in the UK because of the Olympics and there are a number of brands that are using it as an entry to the UK and Europe as a whole.”
Even if a brand is more apt for the streets of Mayfair, this might just be too expensive to consider, especially for a small, emerging retailer. So now, offshoot streets that might not have been worth looking at even two years ago are becoming highly sought-after because of their lower rents.
Cushman & Wakefield senior surveyor Duncan Gilliard, who specialises in West End retail property, estimates that 80% of demand in and around Bond Street is currently from international brands: “They look where their competitors are, especially those from their own country. With the Olympics factor, Regent Street is a key place where retailers want to be. Demand there is at a record high.”
But given that some brands can’t afford the rents in such streets, others close by are a good alternative. Nearby Mount Street is one example. In the past, it was shunned by many retailers because it was seen as the home of galleries and antique shops. But since the arrival of Marc Jacobs in 2007 – at the time seen as a radical step – more luxury brands have set up shop, including Nicholas Kirkwood and Loewe, with others expected to follow.
Domenica Scordo, retail analyst at property consultancy BNP Paribas Real Estate, says: “Retailers are looking for the next alternative as close as possible to existing shopping areas. Whatever type of shopper they have, they are looking for similar brands that are in close proximity to each other.”
Dover Street in Mayfair – another stretch traditionally considered to be largely the domain of galleries – is going to be even more active this year. Just like Mount Street, a couple of retail openings have kicked off a wave of interest. The latest signing, Alexander McQueen, has confirmed Dover Street as a major new site and a true alternative, and Souber estimates that rents have doubled there in the last year alone.
With rents and competition rising all over the West End, the market is finding a solution. But setting up shops slightly off the West End prime sites isn’t the only answer. Many retailers are looking even further off the beaten track. Some brands are totally rethinking their approach to London because for many, the solution lies east.
All eyes to the east
East London has already been firmly put on the map because of the opening of Westfield Stratford City last year. And there is much more going on elsewhere, too. Twenty years ago, Shoreditch was anything but a haven for fashion, design and culture. In recent years, it’s become a nightlife destination for many young professionals seeking a more leftfield, alternative bar and club scene. Retail is catching up.
Neil Saunders, managing director of retail consultancy Conlumino, says: “There’s clearly an interest for retailers in pushing eastward. We’ve already seen that there’s potential in Shoreditch. It’s an area where people are very fashion conscious and reasonably affluent. It’s seen as being a cool area to be in.”
For many, Shoreditch meets a requirement that Oxford Street and Regent Street don’t, in that it offers a mix of residential, office and retail. This suits not just its residents but shoppers from further afield looking for a more unique feel. “The West End does well but there’s no doubt that it’s lost share to some of the smaller niche high streets because people appreciate localness,” says Saunders.
One retailer already well aware of the huge potential of east London both commercially and as a way to reach its ultra-stylish following, is French fashion brand The Kooples.
With 19 stores in the UK, its first location was on the conservative, upmarket King’s Road in Chelsea. Now it’s setting its sights on the edgy east. The Kooples executive director for retail development Jonathan Trepo, who oversees store expansion for the retailer globally, says: “Retailers are looking for something different in terms of locations for their flagship stores and east London is a really interesting place for alternative, edgy people.”
He adds: “Emerging shopping areas in east London are very interesting to us in terms of the spirit of the area and the people living there. The customer profile there is very interesting because there are lots of tourists and people working in fashion, design and architecture and people who are into fashion looking for new brands and something fresh.”
One of the biggest changes to east London happened in December last year when maverick development Boxpark opened its doors. Officially termed a pop-up mall because it will be open for no longer than five years – it is situated on an old railway goods yard in Shoreditch, and comprises 60 individual units housed in refitted shipping containers.
It is the latest creation of Boxfresh founder Roger Wade. Fashion brands such as Nike, Levi’s and Lacoste have set up shop there, and Wade hopes to also attract fresh, exciting small independent shops to the project, and offer them all the help he can. Wade says: “A lot of retailers feel that they are being priced out of the market in Oxford Street and the West End. Independent brands have become squeezed and disenchanted with the high street.”
What Boxpark represents, says Wade – in addition to being a much cheaper location to open up shop than the West End – is an antithesis to the typical high street. When he first sat down with Hammerson, which owns the site and has been joint developer on the project, Wade says the idea was to create a genuinely different shopping location: “The high street represents mass retail. We felt that every mall and high street was becoming the same and it was the death of brands.”
With a mix of recognisable brands such as Dockers, Evisu and One True Saxon plus a raft of UK debuts, new concepts and a range of quirky food and drinks operators, the idea is to provide enough to make Shoreditch a true shopping destination in its own right.
Where the West End offers luxury, high prices and an established retail scene, Shoreditch represents edgy, ultra-modern, emerging retail brands. What’s more, Boxpark should have a resultant impact on the surrounding streets. Shoreditch has firmly arrived when it comes to the London social scene, but the next few years should prove exciting for retail in the area, too.
The impact of Crossrail
Another major change, about to begin literally underneath Londoners’ feet, is also going to have a huge long-term impact on retail. Some say the Crossrail project, on which official construction is set to begin in March, could totally change the way Londoners travel, live and shop, with 37 stations linked to existing overground and underground lines, tube stops and railway stations.
Part of the huge building project – which will allow an estimated extra 1.5 million people to be within 45 minutes of central London – will be to add an extra 75,000 sq ft of retail space in and around the new stations, six of which will be in the centre of the capital.
With the huge number of commuters buzzing around London every day, transport is already a key area for retailers, and is becoming more so, according to Peter Cummings, director of retail at global property consultancy Turner & Townsend. He says: “You can see a lot of development taking place in and around transport hubs, such as in St Pancras which is a fabulous shopping mall in itself. With Crossrail there’s an opportunity to get into future transport hubs like Farringdon. They may well become little retail hot spots, not just for convenience.”
So when Crossrail is completed in 2017, it could create dozens more locations for retailers to set up shop, boosted by the increased flow of passengers. Nash Bond director Richard Scott says: “The opportunities for growth in places like Charing Cross Road are significant because they will be coming from a relatively low base. These locations are close to everything but rents are relatively low at the moment. There’s going to be a big change around every station”.
A tale of two cities is emerging; on the one hand is an expanding West End, with every ounce of prestigious real estate being used. On the other hand, the east is rapidly becoming one of the world’s most famous destinations for art, media, fashion, and now the edgy retail to match. More than ever, retailers in London will need to understand their brand, and their customer, to work out where to maximise potential in the capital’s ever-burgeoning retail scene.
London’s hot spots
The top Zone A rents in London in 2011 (per month)
Bond Street - £950 sq ft
Oxford Street - £710 sq ft
Covent Garden - £650 sq ft
Sloane Street - £600 sq ft
Brompton Road - £575 sq ft
Regent Street - £550 sq ft
Carnaby Street - £390 sq ft
Kensington High Street - £220 sq ft
Cheapside - £220 sq ft
Source: Knight Frank