All change on Oxford Street
Walk down Oxford Street today and it seems hard to imagine that this global destination is on the cusp of massive change. P-THREE conducted a second fascia analysis at the start of the year, which confirms that, since we undertook our original research back in 2021, in the immediate aftermath of the pandemic, outwardly very little on the nation’s best-known high street has changed.
…with three million sq ft of space either under construction or planned, a profound transformation is just around the corner that will be the Street’s biggest shake-up in a century. This has been underscored by levels of pre-leasing activity not witnessed for at least a decade.
Appearances really can be deceptive though: with three million sq ft of space either under construction or planned, a profound transformation is just around the corner that will be the Street’s biggest shake-up in a century. This has been underscored by levels of pre-leasing activity not witnessed for at least a decade.
Little of this is obvious to shoppers and Londoners, as the pace of property development is never racy, but the metamorphosis is well underway. Our original fascia analysis concluded that a significant number of mid-range fashion stores and vacant units would eventually be replaced as the location diversified, and the process of change that will make this happen (so far largely taking place in the background) is well underway.
New leisure and office development will help take out a large chunk of secondary and/or obsolescent retail stock. In total, we calculate that retail floorspace on the Street will reduce by around one million sq ft. But we believe this massive reduction will actually result in the reinvigoration of Oxford Street as a retail destination as retailers rightsize and move towards rationalised flagship stores.
In fact, we suggest that process is already starting, and two factors in particular support that belief:
International retailers are returning and new brands are appearing after a considerable hiatus. Recent lettings and demand from Reserved, Under Armour, and Uniqlo demonstrate a clear confidence, suggesting the Street is likely to once again be a magnet for global youth fashion flagship brands. Home grown fashion from Maniere Du Voir will also be joining them.
The majority of the 222,000 sq ft of retail space currently under offer or let but not open yet on Oxford Street is in large units (5,000 sq ft plus), in part driven by the demand from the international retailers. As the number of these units is finite, availability of large units is likely to become limited.
The remaining retail will be much leaner and the combination of renewed retailer demand, reduced rates and rising footfall are likely to result in growth of retail rents along the Street, something that even very recently seemed unlikely.
Beyond retail, the rate of delivery of new leisure and restaurant premises needs to accelerate, not just to meet existing demand, but to service the large number of workers who will be employed in the new offices due for completion in the next few years. Leisure and restaurant operators will likely move into basement and upper floor level space, which will offer rental levels significantly lower than those demanded for prime ground floor space, which we think will remain firmly in the domain of retailers.
While the overall outlook for Oxford Street is hugely positive, there is no room for complacency. Other cities (take, for example, Paris’ makeover of the Champs Élysées ahead of the 2024 Olympics) are vying for the limelight. And the long-proposed pedestrianisation and rapid transit proposals need to be resolved once and for all.
And, as we have previously noted, one of the Street’s greatest challenges remains: how its multiple stakeholders can act as one to develop an over-arching leasing strategy.
With the composition and ownership of Oxford Street changing significantly, our own suggestion – a turbo-charged, geographically-specific, mini-BID, owned by all landlords whose buildings front Oxford Street, with genuinely-achievable targets and measurable outputs (complementing the terrific and on-going work of the wider-reaching New West End Company) – seems more relevant than ever.
Article by Raquel Sanchez-Diaz, Director, P-THREE
