Shopping district Oxford Street recovers to pre-pandemic population levels as businesses wager on retail stores' viability
Retail vacancies on London's iconic Oxford Street have reached an all-time low of 0.5%, the first time the figure has fallen below one percent since before the pandemic, according to Savills. The street has seen a surge in high-profile openings this year, with Ikea's flagship store now gracing the corner of Oxford Street and Regent Street, alongside a significant Nike pop-up and the redevelopment of the Debenhams store.
Sam Foyle, co-head of Prime Global Retail at Savills, noted a "significant uptick" in retail activity on Oxford Street. Brands are reportedly investing substantially into their storefronts and fit-outs, recognizing the exposure that Oxford Street continues to offer, Foyle said. In the past year alone, brands have reportedly invested around £118m into physical space on the street.
This retail resurgence comes as a number of large property firms have increased their investment in prime London retail properties. Investment group Land Securities (Landsec) announced a shift away from offices and towards retail in their annual results earlier this month, aiming to have their portfolio evenly split between offices, retail, and residential by 2030. Landsec also purchased a 92% controlling stake in Liverpool One shopping center for £490m in November from Grosvenor and the Abu Dhabi Investment Authority.
Additionally, Shafetsbury Capital has expressed confidence in the West End's "enduring appeal," with retail vacancy rates reportedly returning to pre-pandemic levels. The market first began to stabilize last year, with Landsec attributing the change to political stability post-election and lower interest rates.
There's also an increasing recognition among retailers that an omnichannel approach, which combines e-commerce sales with a few key brick-and-mortar presences, remains crucial for brands to appeal to customers seeking tangible shopping experiences. Conversion ratios—the percentage of people who make a purchase—remain higher in-store, making it essential for brands to attract shoppers back into physical stores. This competition for well-located, top-tier retail spaces like Oxford Street is helping drive investment in the street.
Rents on Oxford Street increased by 3.3% quarter on quarter, and Savills predicts continued growth. Marie Hickey, director of research at Savills, said that demand for prime, top-tier retail opportunities will "remain resilient" this year. The increased retail activity on Oxford Street is a testament to strategic investments, renovations of heritage retail spaces, and a renewed focus on experience-driven retail formats, as demonstrated by Ikea's innovative compact urban store. This new format offers inspiration room sets, a market hall, and a Swedish Deli, aiming to provide a comprehensive brand experience beyond just a marketing presence.
- Brands acknowledge the value of Oxford Street as a strategic location for their physical stores, investing around £118m in the past year to enhance their presence and recognizing the significant exposure it offers.
- Transport sectors, such as Shafetsbury Capital, have shown confidence in the enduring appeal of prime London locations like the West End, with retail vacancy rates reportedly returning to pre-pandemic levels, particularly on Oxford Street.
