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BCSC: Q&A with Kevin Farrow, CBRE

CBRE’s senior director – Central London retail agency, talks to Drapers about retail property trends in the both the wider market and central London  

What did you think of this year’s BCSC? What was the retailer turn-out like? I think increasingly we’re seeing more of these types of events, whereas before BCSC was the only event of its type. The show does appear to be as busy as the last two or three, but I think anecdotally we’re seeing fewer people in comparison with Completely Retail. That we know was very successful. But fundamentally BCSC is about shopping centre leasing, which is really what our business is about.

What are the main concerns that landlords and retailers are talking to you about?Maintaining the vibrancy of their existing property portfolios. From a landlord’s perspective it’s absolutely key. They are not only in competition with other landlord/shopping centre owners, but other town centre locations in some instances. So for example, there is a resurgence in Manchester city centre, in Glasgow there are two main malls, but equally there is a shopping centre district in the city centre itself. So I think that need to compete, renew and reinvigorate some of the tired shopping centres – and that’s where international retail comes in. Everybody wants something new. Landlords are quite keen to secure the next best thing, which is the aspirational retailer. And they are prepared to do deals with them that they perhaps wouldn’t have done two years ago. It’s not just about paying rent.

Focusing on central London – what trends are you seeing there? [In terms of retailers] luxury or premium, or international. The fact is London is a global capital, so every global brand has to have a flagship store in London. That is where the demand is coming from, that’s where we’ve seen the demand from international brands, looking to secure London, Tokyo, New York, Paris and to a lesser extent Milan.

There will be [further entrants]. We’ve seen the first major Chinese brand, Bosideng, come over. South Molton Street is a real property related story. Rents have gone through the roof there, but equally it’s a very cyclical market. Five years ago there was a lot of availability, now there’s very little availability, or what availability there was has changed hands. You’ve got a lot of new retailers looking in South Molton Street.

Dover Street is also becoming more popular. There are several things happening here. It’s only 100m from Bond Street where rents are £1,000 per ft. On Dover Street they’re £300 per ft. So there’s the obvious saving, but likewise that pitch is slightly edgier, and less mainstream that Bond Street. So if you have a premium brand, and you don’t think Bond Street fits with your brand, and actually you can’t afford it anyway, Dover Street is a great alternative. As is Albemarle Street.

We’re advising a number of brands. We’ve already acquired three stores on Dover Street for brands that actually didn’t want to be on Bond Street, but wanted the proximity to Bond that allows them to draw on the same customer.

There’s also another trend for luxury retailers to buy their own buildings. Chanel are looking to buy their freehold, and Louis Vuitton have bought their own building on Bond Street. I think we will see more of that. Bond Street is of finite length. So if you are a Bond Street brand, you’re always going to need something on that street, so you might as well go long term and buy the building. The other issue is that you can’t actually buy freehold buildings in many other locations - certainly not in very many of the luxury locations. Sloane Street’s owned by two of the London Estates, Regent Street’s owned by Crown Estates, so it’s only Bond Street or Oxford Street where there is some individual ownership where you can buy.

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