New West End Company in Property Week

Oxford Street feels squeeze as Regent Street steams ahead

By Mark Faithfull

The story of Regent Street is neatly encapsulated by three stores along the sweeping shopping avenue, which celebrates the 200th anniversary of its naming this year.

Exhibit one is H&M Home, which opened a 7,000 sq ft flagship store earlier this year, complete with in-store florist, café and event area.

Meanwhile, Reliance Brands – owned by Asia’s richest man, Mukesh Ambani – has agreed to purchase the 259-year-old toy store chain Hamleys, securing its future, and Microsoft will open its first UK store at the top of Regent Street, at Oxford Circus, on 11 July.

These high-profile deals on Regent Street come at a time when Oxford Street has been dogged by problems facing long-term tenants including Arcadia – Miss Selfridge is to close – as well as Monsoon, Accessorize and Debenhams.

So why do these two bisecting streets appear to be experiencing such increasingly divergent fortunes? And is all as it seems?

“April and May sales have been very sluggish across the West End, although luxury has continued to perform strongly,” reflects Henry Gregg, director of external affairs at New West End Company.

“The squeezed middle has inevitably affected Oxford Street, which has experienced a bit of a mixed bag, while Regent Street has held up reasonably well. But the opening of Market Halls [in the former BHS site on Oxford Street] should bring a new dynamic.”

Regent Street is solely owned and managed by the Regent Street Partnership – a joint venture between The Crown Estate and Norges Bank Investment Management, which have sunk around £1bn into the regeneration of Regent Street since 2002.

This has undoubtedly boosted Regent Street, but Richard Scott, director at Nash Bond, warns against snap conclusions about its performance compared with Oxford Street’s.

“It’s not a case of Oxford Street versus Regent Street, because very few retailers would choose between them. Rather, they, along with Bond Street, should act symbiotically,” he says.

“Oxford Street tends to be mid-market, Regent Street premium and Bond Street luxury. It’s no secret that the mid-market has been badly squeezed and even with an anchor like Selfridges at one end, Oxford Street faces challenges.”

West End remains resilient

This may be so but Jonathan Bayfield, senior analyst, real assets research at Aviva Investors, adds that at a time when national retail figures are chronically weak, London’s West End, as a whole, remains extremely resilient.

This is borne out by statistics from tax refund specialist Planet Intelligence, sourced for Property Week, which show year-to-June refunds for purchases on Regent Street were broadly static (-0.1%) and slightly up (+1.2%) for Oxford Street.

“Oxford Street may be experiencing a blip because of its mid-market positioning but London differs from the rest of the country,

not only in terms of tourism but because of its catchment of young, frequent visitors and high spenders, especially on dining,” says Bayfield. “While ABC1 visitors to Regent Street account for around 45%, compared with 31% on Oxford Street, the latter has a larger volume of shoppers because it is much bigger.”

While comparing Regent Street to Oxford Street may be troublesome due to their different offerings, Regent Street appears to be better cocooned from the wider retail crisis than Oxford Street.

This is partly to do with the former’s premium retailers, which tend to be more resilient. But according to James Cooksey, director of the central London portfolio at The Crown Estate, a long-term view and considered management of not just the retail but all uses and the public realm are also key to Regent Street’s success.

On Oxford Street, this kind of strategy is more difficult to enact because of its multiple ownership.

“We can curate the whole mix and create complementary retail and uses. While the focus tends to be on retail and restaurants, in fact there is a strong and symbiotic relationship between these and offices – the total working population across Regent Street and St James’s [half of which is owned by The Crown Estate] is around 25,000,” he says.

There is 1.5m sq ft of retail and 2m sq ft of office space on Regent Street alone. “By area, around half the estates are devoted to commercial, 25% to retail and the remainder to leisure and residential,” he adds.

Cooksey points to a series of smaller projects that have also contributed to Regent Street’s performance, including public realm enhancements and store updates to make them suitable for modern retailers.

But it is the street’s mixed-use nature and the drive towards bringing in new uses that he believes have been key to boosting retail trade. One of these new uses is The Crown Estate’s own debut co-working and flexible office space at One Heddon Street.

“Our new workplace offers 350 workstations, of which around 157 have so far been let,” says Cooksey. “This has really changed the profile of the businesses entering Regent Street and our hope is that many of them will be able to grow with us. It’s a major shift for us too, from a property company to a provider of services.

“Over the next five years, we intend to develop around 1m sq ft of space, so there will be a steady stream of planning applications as we look at the next iterations of retail, leisure and offices. These will not be spaces we create and bring to market but will be driven by what our occupiers say they want from us,” he adds.

Positive Outlook

Bayfield adds that single ownership of Regent Street not only allows strategic zoning but also enables The Crown Estate to develop relationships with Westminster council and Transport for London, for example.

However, while he remains upbeat about Regent Street, he is no less confident in Oxford Street’s future. “Oxford Street is much longer than Regent Street [and therefore a bigger draw by scale] and we forecast that in the medium term, quality and quantity will be attracted to the street,” he insists.

“Retailers tend to locate with others that complement them and so, even with diverse ownership, this does tend to help create zones.

“In addition, a number of food and beverage hubs have grown up just off the shopping street. Our investments are shifting towards a smaller number of key locations and Oxford Street is one.”

Nash Bond’s Scott also remains bullish about the West End and expects Regent Street to move from “revolution to evolution”, given the successful curation of the street.

“One of the main aspects of The Crown Estate’s strategy has been to not focus on driving peak rents but instead to bring them up across the street by making it all prime, so there are areas that appeal to tech, fashion or homes and homewares,” says Scott.

“That is a reflection of long-term planning. Given Regent Street Partnership’s development options, this means that rather than look at an occupier need and create space for that specific requirement, they can look at evolving the whole street.”

Oxford Street may be struggling in the face of the headwinds affecting the retail sector but the consensus is that, while Regent Street is currently performing better, both streets continue to be bastions of British shopping.

Fri 28 June 2019