Retail view: With space coming on stream and mixed Christmas reviews, analysts are watching consumer confidence with bated breath
Schizophrenia seems to have invaded the retail market. Some retailers are reporting the best Christmas trading for several years while others are reporting the worst. Some commentators argue that there will always be businesses that do better than others, but economic instability is throwing every bad, and good, performance into sharp focus.
In London, the number one retailing location in the UK, many wonder how confident retail agents are about the coming year.
For the first time in a long while, a significant amount of space is coming to the market. Westfield’s 1.6m sq ft scheme Westfield London at White City, W12, is due to open its doors in November, and on the other side of town, the 2m sq ft Stratford City is due to get under way this year.
Given the tight supply of retail space in prime locations, some would say that Westfield London could not come at a better time. In addition, record rents are being achieved when new space does become available, such as at the former Dickens & Jones store on Regents Street, W1.
Agents uniformly describe London as a different market to the rest ofthe country. It is the location of choice for retailers looking to showcase their offer and has such a diverse customer base.
So is it business as usual for London retail agents?
“It would be naïve not to have any concerns,” says Peter Courtenay, senior director at Lunson Mitchenall. “A lot of commentaries give the impression it has all stopped dead, and that isn’t the case. But some retailers are using those fears to come back and renegotiate terms on deals.”
Peter Mace, partner at Cushman& Wakefield, adds: “What could happen – and I don’t think it will happen dramatically – is that retailers could get nervous, cut back on spending and think twice about going into a new market.”
Views on further rental growth are best described as cautiously optimistic. Mace predicts continued growth in prime areas should supply remain the same. So, not too many more casualties, such as Dolcis outlets, and things should fine.
Courtenay believes rental growth will be “benign”, with fringe locations most likely to suffer if a downturn does make retailers more cautious. “The key is consumer confidence, and that depends on employment, which is OK at the moment. But if that changes dramatically, consumers will tighten their belts,” he says.
It is hard to imagine Oxford Street on a Saturday afternoon with anything other than a patience-testing crush of shoppers. However, the number and weight of items in their plastic bags will be a good barometer for how London’s retail market ultimately performs this year.
