Rents in prime central london locations continue to fall

In its new report on the central London retail market, the property agent says that the decline has been driven by falling rent levels across the City and some key West End streets.

“This is largely a reflection of robust domestic spending on eating out as we have emerged from lockdown but has also been supported by the relaxation in planning that permits the conversion of retail to F&B use,” it says.

However, Savills also reports that occupier sentiment is improving, driven primarily by food and beverage operators.

Prime West End vacancies decreased on a quarter-by-quarter basis, reaching 13.7% in Q3 2021, down from 14.2% on Q2 2021, suggesting a start of a recovery in occupational demand, says Savills.

Year-on-year footfall in the West End for the 13 weeks of Q3 2021, was up 33.4%, but still down 47% versus 2019.

In an online blog,​​ the property agent also says that there are now 'reasons for real optimism among city centre operators'. "Perhaps the best indicator of this is the strong performance of the majority of late night businesses since restrictions were fully lifted," says Paul Breen, director licensed leisure.

"These operators have felt the very worst of things during the pandemic but the enthusiasm shown by customers to get back out to late night bars and clubs is very encouraging, as is their willingness to spend at least as freely as they were in pre-Covid-19 times."

Looking ahead to next year, Savills says it expects the downward pressure on vacancy to become more widespread and accelerate, resulting in a tightening in landlord incentives.

“Although, on average, we are perhaps some way off from returning to pre-Covid vacancy levels. This tightening in vacancy should mean a stabilisation in headline rents in a number of locations,” says the report.