Oxford Street rebounds to pre-pandemic occupancy as firms bet on shops
Shop vacancies on Oxford Street have fallen below one per cent for the first time since the pandemic as brands compete for best-in-class retail space.
Overall shop vacancies on Oxford Street fell to 0.5 per cent in the first quarter of the year, the first time the figure has fallen below one per cent since before the pandemic, according to Savills.
The street has seen a host of big-name openings already this year, with Ikea’s flagship store now dominating the corner of Oxford Street and Regent Street, plus a huge Nike pop-up and the redevelopment of the Debenhams store.
Co-head of Prime Global Retail at Savills, Sam Foyle, said there had been a “significant uptick” in retail activity on Oxford Street.
“Brands are investing substantially into their stores and fit-outs… and this is set to keep growing as retailers recognise the exposure that Oxford Street continues to offer,” he said.
Foyle added that brands have invested around £118m into physical space on the street in the last year alone.
Property giants pivot to retail
The data from Savills comes after a number of large property firms have upped their investment in prime London retail properties.
Investment group Land Securities – known as Landsec – announced a pivot away from offices and towards retail in their annual results earlier this month.
It plans to have its portfolio evenly split between offices, retail and residential by 2030.
Landsec bought a 92 per cent controlling stake in the Liverpool One shopping centre for £490m in November from Grosvenor and the Abu Dhabi Investment Authority.
Shafetsbury Capital, too, has expressed its confidence in the West End’s “enduring appeal”, saying retail vacancy rates were back in line with pre-pandemic levels.
Omnichannel shopping boost prime rents
The market first began to stabilise last year, with Landsec attributing the change to political stability post-election and lower interest rates.
There’s also an increasing recognition from retailers that an omnichannel approach, with e-commerce sales supported by a few key bricks-and-mortar presences to appeal to customers seeking more tangible shopping experiences.
Conversion ratios – the percentage of people who make a purchase – remain fundamentally higher in-store, making it crucial for brands can get people back on the high store and into brick-and-mortar.
This has led to high competition for well-located, best-in-class spaces like Oxford Street, helping to prop up the investment market.
Rents on Oxford Street increased by 3.3 per cent quarter on quarter, according to Savills, with “potential for further growth”.
Marie Hickey, director of research at Savills, said that demand prime, best-in-class retail opportunities will “remain resilient” throughout the year.