GPE on how the West End is buzzing again

It’s not so long ago that the once-glittering West End of London shopping district seemed a down-at-heel, almost deserted shadow of its former self. 

 
But despite footfall still not being quite back to pre-pandemic levels, the turnaround this year has been marked as huge developments have continued and big names return to open major flagships.
 
GPE — the landlord formerly known as Great Portland Estates — is a big part of this comeback and has been behind some of the highest-profile openings of late with modern, multi-level spaces that sensitively incorporate heritage features (where required). 

Recent periods have seen it clinching some major deals such as a new 10-year lease with VF Corp’s The North Face, extending its flagship store by 33% to 9,700 sq ft into an adjacent unit; and a new 10-year lease for fashion brand Joseph. 
 
This completed the repositioning of GPE’s retail offer of its Regent Street Kingsland and Carrington House locations, following Tumi, Russell & Bromley, and The Body Shop that all completed new leases with GPE last year. 
 
The company also saw Reserved opening a new store at the Tottenham Court Road end of Oxford Street, in a two-storey format that feels much more upmarket than its single-level store at Oxford Circus. Pandora and The Fragrance Shop have also taken new space on the street.
 
Then there’s its prestige Hanover development on Bond Street, hosting DSquared2 and Hackett, among a raft of big names, with Hackett being a good example of how new developments can offer a heritage feel.
 
It’s all a reflection of how the West End is buzzing again, with some genuinely impressive new store designs, despite rents being a bit lower due to the high level of supply. 
 
Fashionnetwork.com spoke to GPE’s head of Retail Sarah Goldman about the bounce-back.
 

Her role gives her ultimate responsibility for leasing and asset management of the firm’s retail estate, which makes up around 20% of its wider portfolio in the West End.
 
Having worked in retail for around 20 years, she’s seen some stark changes since the pandemic.
 
FN: What are the issues the West End has faced in recent years?
 
SG: We’ve seen a forced change… forced as in working patterns that have evolved. We’ve seen tourism affected, and we’ve been affected by the tax-free shopping [issue]. A lot of things have contributed to [lower] footfall, not just the Covid although that was a big part of it.
 
We’ve also seen a huge amount of supply come back onto the market. Some of that has probably been through retailers that were on the cusp anyway and had not evolved in their retail thinking in the same way as some other brands. Maybe Covid was just the tipping point for them. 
 
Some of it has been retailers rethinking their retail strategy… do they need that many stores in certain locations? Do they want bigger and fewer, or smaller and more, or a combination of those things? 
 
FN: And what about the ‘American candy store’ blight on Oxford Street. Why has that happened and is it receding?
 
SG: There’s been a huge amount of headlines about candy stores. That’s a reflection of the increased supply and obviously the way business rates work in this country, so you have a lot of landlords trying to mitigate business rates and short-term letting is the way to do it. We had a few in our portfolio, despite all the checks we do. But we made a decision — this is not what we want for Oxford Street, this is not what we want to be doing, so we actively got rid of them at great expense and found better tenants to go in there.
 
Part of the problem and the challenge with Oxford Street is the fragmented ownership. You don’t have responsible landlords across the entire street. Some of them are internationally based and they are literally just focused on rates mitigation.
 
FN: That must be a particular issue as sites come up for redevelopment?
 
SG: In the last 12-24 months there has been a lot of development activity. But it takes time to get to that stage and it takes a lot of time to get to the stage where you can redevelop and that’s where the short-term outlook comes in. Candy stores… It was a moment in time. It reached a crescendo but currently it represents about 1% of the floor area on Oxford Street so I think the negative PR should be historic going forward. 
 
FN: So what’s West End demand like at the moment? 
 
SG: Better, much better! We’ve definitely seen a bounce-back. Our vacancy rates are down now, back to where they were pre-Covid. Some of that has been helped [by prices]. The amount of supply has obviously meant a rebate [against] some of the rents that we were seeing pre-Covid. But the demand’s definitely back and we’re seeing it now not from just UK retailers but international retailers as well. For international brands, some of them are their first stores in the UK. In the last six months, something like 28 deals have gone under offer on Oxford Street, which is about a quarter of a million square feet! 
 
It’s a lot of space and it’s great to see.

 
FN: Are these newcomers mainly fashion-focused as the West End traditionally was? Or is the balance of categories changing as with the old Topshop site becoming Ikea and Debenhams and House of Fraser closing?
 
SG: We’re definitely seeing more [category] breadth coming to the market, particularly in the core streets that as you say were dominated historically by fashion. I think that has a lot to do with the re-pricing of the street. When you’ve got increased supply and more limited demand, prices are going to cool. And I think what we’ve seen is that has allowed different operators to come in. So more food and beverage-type guys, some ‘competitive socialising’ occupiers. We’ve particularly seen that around one of the assets called Mount Royal which is up by Marble Arch on Oxford Street. A lot of deals have been more tourist-focused.
 
You’ve seen Monopoly Lifesized that’s opened on Tottenham Court Road. There’s a deal happening on that street, we understand, with Barbie. All experiential stuff that would have been historically priced out of the market before it was able to be here. 
 
In addition, we’ve got other categories that were particularly doing well during Covid. Things like homewares and home improvement. People have realised with the way mortgage rates are and the way the cost of living has gone up it’s sometimes cheaper to stay and up-do your house rather than move. So [lettings are] big on home improvement. We’ve let to Bang & Olufsen on Bond Street in that tech/home improvement category. They haven’t had a company-owned store here for a long time.
 
FN: But Fashion is still the biggest percentage?
 
SG: Yes and fashion is still doing well. We’re seeing demand from the fashion guys particularly on the bigger spaces. There have been three large lettings down Oxford Street East in the last 12 months. One was with us, which was Reserved, and opposite is Footasylum taking over the old New Look store, also with us and right by the CrossRail Station. And Uniqlo has taken another store on Oxford Street. Kurt Geiger 1702671813 has the biggest store they’ve ever taken on Oxford Street, plus Carvela and Steve Madden. And we’re also seeing an uptick in sportswear brands coming back — [such as] Under Armour.
 
FN: Clearly the deals they signed to return to London were being negotiated while the pandemic was still an issue. What appealed to retailers back then?
 
SG: Why they [started] coming back is because a lot of the international brands were seeing more positive sales happening in London than they were seeing in their own countries, possibility because of the pace of the vaccine rollout we had. That helped the conversations early on and we did start to mop up some of the supply. 
 
FN: Footfall is recovering but is working from home still an issue?
 
SG: Ultimately what we’ve seen is that people are back and people are spending. In fact, spending is back up to where we were pre-Covid and starting to overtake it. Fewer people are spending but those [that come] are spending more — and that’s what’s critical to retailers.
 
We’re starting to see more patterns where there might be quieter days, but we’re still getting the same number of people [overall] coming in on a weekly basis. I speak to friends in the industry and most of them are in four days a week now and if they need to come in on a Friday, they will. Fridays are probably quieter in the West End and [for socialising] instead of it being Friday night, it’s all about being the Wednesday night and the Thursday night now. It’s still about people going out in the evening and enjoying the after-work activities, they’re just doing it on different days.

 
FN: And the weekends?
 
SG: I’ve been here at the weekend and it’s full of shoppers and residents. I think generally speaking that weekend footfall is probably back to where we were.
 
FN: So are there still any obstacles to the West End fully recovering? We’re told tourists are still coming but they’re doing their big spending elsewhere.
 
SG: It’s interesting we’ve got quite a few links with hotels through our ownerships around here in London. Speaking to most of them the tourist visitors are back up to where they were. The only one that was really lagging a little bit is the Chinese but even they are starting to come back. But the international [spending] piece is still missing. The real killer is the VAT miss. You hear it time and time again from everyone. It doesn’t really matter how well London is performing, it still isn’t performing as well as it could if that was reinstated. 
 
It’s quite extraordinary, I haven’t been able to see one piece of data that supports [the VAT-free shopping for tourists ban] against when you look at against what tourism brings in terms of income. It supports our economy. The entire industry is up for its return and only the government is against it!