Despite the easing of lockdown and widespread reopening of retail from 15 June, the effects of the pandemic are having a lasting impact on central London retail. The recovery process is somewhat delayed due to the absence of both local office workforce and international tourists, exacerbating the recent weakening in occupier confidence. This has resulted in tougher retailer-landlord negotiations, applying further downward pressure on rents, with some landlords looking at rent reductions or temporary turnover-based rents.

As a result, rental declines accelerated across central London in Q2, with average prime Zone A rents falling by 12.9% year on year, representing the most pronounced shift in rents on Savills record. Prime West End hasn’t been immune to the fall in rental levels but has experienced a relative degree of resilience, reporting a much more subtle rental softening of 3.8% year on year.

The staggered reopening of retail presents ongoing challenges with understanding the true vacancy tone across central London, however we can expect a number of stores to remain shut permanently in light of the recent spate of administrations and retailers consolidating their store portfolios.

As a result, availability of well-located assets on key central London streets is likely to increase, creating potential openings for opportunistic retailers seeking centrally-located units at relatively discounted rental tones compared to a year prior.

Despite the immediate challenges facing central London during the recovery period, the longer-term fundamentals remain robust with government support and a number of infrastructure projects set to support the future of the city centre.