London remains key destination for luxury retail

London is holding on to its position as one of the world’s foremost luxury retail cities, with New Bond Street seeing eight openings last year and Sloane Street seeing three. Several of these – including Gucci’s new 16,000 sq ft New Bond Street flagship – involved brands relocating to significantly upscaled stores, highlighting the appetite of luxury retailers for larger spaces, Cushman & Wakefield said in its first European Luxury Retail report. The report shows that New Bond Street, and to a lesser extent Sloane Street, are keeping up with an elite group of just 20 key luxury streets across Europe. Together, these streets – in 16 cities across 12 countries – accounted for 107 store openings in 2023. More than 40% of store openings last year were in the key markets of France, Italy and the UK. Almost half of all fashion openings were in these three countries, but more than 70% of jewellery and watch retailer store openings were on streets outside France, Italy and the UK. In London, Sloane Street leasing activity was muted in 2023 owing largely to extensive makeover and associated construction works, due to complete at the end of 2024. Vacancy there stands at 11%. Back on New Bond Street, prime pitch vacancy in the mid-street area is now at close to 0% (versus 8% on Bond Street as a whole), demonstrating resilient demand for a prime presence in London’s West End. Gucci’s new flagship and other recent openings, such as Roberto Cavalli’s new store, have driven interest from other luxury retailers, with several major brands known to be looking at the area, Cushman said. Demand has spurred on delivery of new space, most notably through the redevelopment of the Fenwick department store and the ex-Victoria’s Secret flagship site. However, New Bond Street rents have yet to recover to pre-pandemic levels: in December 2023 they were still 11% lower than in December 2018, Cushman’s research shows. For Sloane Street, rents are 2% lower than December 2018 (see chart). Taking Europe as a whole, rents on luxury streets are now back to 2018 levels, driven particularly by strong growth in Italian markets.    Luxury retail sales in the UK were up 4% last year to €20.5bn (£17.6bn), while international tourist arrivals into the UK were up by 21.5% to 36.6m. Sally Bruer, head of EMEA retail research at Cushman & Wakefield, said: “The resilience of luxury retail speaks to the strength of demand from luxury brands seen across Europe for a presence in some of the most desirable global retail addresses. “This can be seen acutely in core locations, such as Milan’s Via Montenapoleone, Paris’s Avenue Montaigne and Avenue des Champs-Élysées and London’s New Bond Street, where long-established reputations for exclusivity lead to a concentration of luxury brands raising the bar on prestigious in-store experiences.” Bruer added: “We expect that retailers will remain focused on these core luxury locations, and in turn anticipate further rental growth as well as a continuing appetite from luxury retail players for selective investment into real estate assets for long-term strategic positioning.” According to the report, many brands are looking to increase the size of their stores to carry more ranges and products, as well as facilitating creative and innovative concepts, particularly around in-store exclusive customer experiences. Again, this can be challenging when faced with consistently constrained availability and a concentration of competitor demand on key streets and precincts. Photo © Kin Shing Lai/ Unsplash