Commercial agent Zach Maiden looks at the retail rent trends South West.
The Westcountry, with its rugged coastline, charming villages, and vibrant towns, has long been a magnet for tourists, second-home buyers, and those seeking a high-quality lifestyle. In recent years, the region has witnessed significant changes in retail rents, particularly in affluent and coastal areas.
As predicted last year at our Market Review the South West retail market has performed well over the past 6-9 months due to the lifestyle and relative isolation of the region. In addition locations such as coastal towns actually saw a bounce back with rents starting to increase as supply has decreased.
Towns such as Dartmouth and Totnes have seen steady increases of rent and less occupancy on the High Street and good secondary pitches. The same can be said in other coastal locations further west and into Cornwall. This spike seems to have been caused from an increase in confidence in the market as well as reinvigorated lifestyle brands such as Edinburgh Wollen Mill, White Stuff and Saltrock have increased appetite for space and there seems to have been a bottoming out in the subsector.
This is also reflective of the Prime West End market in London so it is no surprise to see the South West performing so well. The Central London retail market, including the prestigious West End, has shown positive momentum. Prime West End vacancy rates have compressed significantly, falling to 6.5% in Q3 2023. This decline is a remarkable 282 basis points (bps) compared to Q2 2023. Bond Street has seen a sharp increase in retail rents and niche locations are starting to set precedent and become very desirable.
Key retail streets, such as Oxford Street East, have also experienced strong leasing activity. Notably, brands like PSG, Dr. Martens, Varley (which opened its inaugural European store on Kings Road), Nammos (with its first restaurant in Knightsbridge), and Rouje (which launched its first store on South Molton Street) have contributed to this trend. There are even predictions that by year-end, the number of new international entrants in London will likely surpass those of 2022,.
There is clearly a surge in activity and the top down fall is trickling to affluent regions as confidence has come back. For this reason we expect to see more investment opportunities arise in the local regions as the South West appears a relatively safe bet when it comes to its retail offering.
Despite the positive outlook for spend over the 2023 festive season, there are headwinds facing domestic spend. The cost of living squeeze and rising debt costs have indeed impacted consumer behaviour although changes in retail trends are pushing consumers to quality over quantity where internet spending is paramount. However forecasts suggest that inflation will continue to slow in 2024 and 2025, supporting positive real disposable incomes. Consequently, these headwinds are expected to be relatively short-lived.
In summary, the Westcountry’s retail rents reflect a dynamic interplay of local affluence, coastal allure, and changing consumer behavior. As towns evolve, businesses adapt, and tourists explore, the retail landscape continues to transform, making it an exciting area to live, work and leisure.
It will be interesting to see how the retail market performs over the coming months but we expect to see confidence continue to increase and investment opportunities to present themselves.
