BNP Paribas Real Estate initial data has revealed that deployment into retail investments in central London in H1 2023 stands at over £810m, raising fresh hopes for the sector and the revival of Oxford Street.
Significant deals in H1 2023 include the £430m purchase of Fenwick’s on New Bond Street by Lazari Investments; the £140m purchase of 27 Old Bond Street & 13 Albemarle Street 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 forecast that based upon off-market activity they expect retail led investments to exceed £1bn year to date, with around £75-100m of investment allocated towards Oxford Street opportunities.
Fergus Keane, head of central London investment markets at BNP Paribas Real Estate commented: “Retail investment in traditional West End locations are in high demand. To put the £810 million in context, this compares to around £1.2 billion transacted in the West End’s office sector over the same period. Volumes in these sectors are never normally this close. “
Whilst luxury store buildings are experiencing minor corrections at up to 25bp, this is holding very stable relative to other investment sectors and locations. This is 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. Rental growth is very much on the cards and investors are tuned into this.”
Luxury retail momentum
Luxury fashion brands are targeting new space available from the existing Hermes store on Bond Street up to Fenwicks to New Bond Street, or powering up existing locations. Recent activity includes:
– Record-breaking YSL new lease deal at the corner of Bond Street and Grafton Street, which is reported to be in excess of £3,000 Zone A
– Richard Mille, the Swiss watch brand, agreeing terms to buy Standbrook House, the company’s flagship store at 2-5 Old Bond Street
– Gucci’s deal with Trophaeum Asset Management, which will see the brand relocate its flagship to 144-146 New Bond Street, taking 15,300sq ft
Fergus continued: “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.”
The news comes as the Oxford Street Programme consultation recently launched proposing public realm improvements along the entire 1.8km length of the street from Marble Arch to Tottenham Court Road.
