A drastic shortage of space in and around London’s prime luxury shopping zone Bond Street is pushing upscale and boutique retailers to spread out and create new retail districts.
Savills has tipped that South Audley Street and Cork Street in Mayfair, W1, will become the latest places where designer fashion houses want to set up shop.
But what is it that is making them attractive? And can they attract the right type of occupier?
Darren Yates, a partner in Knight Frank’s retail research team, says that retailers are being forced to look at alternative destinations “because there is virtually no space available to rent”.
Vacancy rates in Bond Street, Albemarle Street and Dover Street stood respectively at 0.7%, 2.3% and 0% as at September 2014, according to Yates.
Couple that with strong rental growth – zone A rents on Dover Street rose by 57% to £600 per sq ft last year – and even the most luxurious of brands might start looking for more affordable options.
But according to Anthony Selwyn, director of central London retail at Savills, it is not just rental and space pressure that is leading the spread to new areas. Retailers are looking for fresh space and locations to make their own.
“Central London’s retail landscape is becoming more closely aligned with New York’s, which is made up of a series of luxury retail villages each with its own distinctive character and brand profile,” says Selwyn.
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He adds: “London is becoming more like what we have seen in New York. There is a large amount of retailers expanding from Bond Street.
“Many want a different location where there is more imaginative space, but where they still know footfall will come to them.”
And landlords are taking note.
Haydn Cooper, Mayfair director at Grosvenor, which owns much of South Audley Street, says: “We have sought to emphasise that South Audley Street will be an extension to Mount Street [where the firm has invested heavily since 2007 on public realm works and attracting fashion tenants].”
He adds: “We are looking for younger, trendy, energetic and cool fashion houses to come here.”
Cooper’s plan is coming to fruition, with fashion designer Erdem Moralioglu, who dresses celebrities including the Duchess of Cambridge, opening at 70 South Audley Street this year.
French designer Balmain will also be opening its European flagship at 69 South Audley Street in 2015.
Meanwhile on Cork Street, retailers and galleries will be attracted to Native Land’s £300m mixed-use scheme, which will link Burlington Street and Cork Street via a new arcade.
In addition to signed deals, a further 12 overseas companies could seek space equating to around 40,000 sq ft by the end of 2015, says Savills.
These firms will almost certainly be looking closely at London’s new luxury village.
