Investors splashed out more than £810m on retail properties in central London during the first half of the year, closing in on West End office volumes, according to data from BNP Paribas Real Estate.
That is a significant increase on H1 2022, when volumes reached £204m. Researchers said the latest figures were largely buoyed by the £430m purchase of Fenwick’s on New Bond Street by Lazari Investments.
Other significant deals during H1 included the £140m purchase of 27 Old Bond Street and 13 Albemarle Street, W1, by Blue Tower Ventures, and the £103m purchase of Kering Groups YSL existing flagship on 32-33 Old Bond Street by Swatch Group.
The firm predicted that, based on off-market activity, retail-led investments would exceed £1bn in the year-to-date, with around £75m-£100m of investment allocated towards Oxford Street opportunities.
BNP PRE said the increase in volumes raised “fresh hopes for the sector and the revival of Oxford Street”.
Fergus Keane, head of central London investment markets at BNP PRE, said: “Retail investment in traditional West End locations is in high demand. To put the £810m in context, this compares to around £1.2bn transacted in the West End’s office sector over the same period. Volumes in these sectors are never normally this close.”
Keane added that while luxury store buildings are experiencing minor corrections at up to 25bps, the category is holding stable, relative to other investment sectors and locations. He added this was evidenced by a number of deals at yields of around 3% and below throughout this year and last, particularly in and around West End luxury shopping destinations such as Bond Street.
BNP PRE also noted that luxury fashion brands were targeting new space available from the existing Hermes store on Bond Street up to Fenwick’s on New Bond Street, as well as “powering up” existing locations.
Recent activity includes the record-breaking YSL leasing deal at the corner of Bond Street and Grafton Street, reported to be in excess of £3,000 zone A; Swiss watch brand Richard Mille agreeing terms to buy Standbrook House, the company’s flagship store at 2-5 Old Bond Street, and Gucci’s deal with Trophaeum Asset Management, which will see the brand relocate its flagship to 144-146 New Bond Street, taking 15,300 sq ft.
Keane said: “There is change on the horizon for the mass-market retailing sector on Oxford Street, too, and the real estate here is now offering a very tempting proposition. Department stores are repurposing to new multi-use buildings. Rents have corrected by circa 40% to 50%. Business rates are coming down. The crossrail stop at Bond Street is now open. Yields have moved out to 5.5-6% in recent years and now look fair value. There are clear signs that a number of transactions are starting to progress as investors – very much a destination to watch.”
View details of recent retail investment deals in the West End >>
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