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London's core West End contributes 20 per cent to the capital's GDP, reported global real estate experts JLL to an audience of the West End's most influential businesses this week. The area is expected to reap £12.5bn in spend by 2020, an increase of 25 per cent on the current figure, according to sources provided by the New West End Company and Heart of London Business Alliance, who commissioned the report.
Over 200 major business and leisure leaders gathered to hear views from an expert panel of Britain's leading economists including Tony Travers from the London School of Economics and UK Economist and former advisor to the Mayor of London Bridget Rosewell, as well as industry experts such as Chris Brooke-Carter from Retail Week and David Shaw, Head of the Regent Street portfolio, The Crown Estate. The event discussed the future of London's core West End and how it can keep ahead of competition from rival cities, as the capital currently stands as the number one European retail destination.
The core West End area is a global retail and leisure powerhouse. The area includes Bond Street, Oxford Street and Regent Street, as well as Leicester Square, Piccadilly and St James's. In total, the West End covers 1,000 businesses, 42 streets, 150,000 employees, attracting 300 million visitors per year and a combined spend of £10bn.
The report, London's West End: Review and Outlook identified key themes:
• The dynamic mix of retail and leisure is what draws visitors and businesses to the area
• Growth in international visitors is expected in 2013- from mature markets like North America and China, but a surge in domestic visitors is also expected to boost spend
• Investment from the public and private sector to ensure improvements to the public realm is key to remaining competitive with other cities
• The demand for good quality retail space in the West End is fierce, and as such the area will expand and create new districts to cope with demand. Providing the high-quality space is vital to continue to secure flagship brand stores like J Crew, which opens its first European store in the area this year.
• The West End needs to expand its restaurant scene, so that its offer is as distinctive and diverse as the retail and leisure mix to be able to compete with other major city hubs
• The increased spend forecast for 2020 [up from £10bn in 2011] is predicted to be driven by retail spend from wealthy Asian and American tourists, as well as European visitors [attracted by the weakening pound]. The easing of the Eurozone crisis should encourage more EU visitors to the UK; providing an opportunity to re-build the drop-off seen from this group during 2012, though stronger visitor growth is likely to come from outside the EU.
• In addition, London and the core West End remain a magnet for overseas investors. London has been the most active city globally for the last three years in terms of international cross border investment.
• Overseas investors are seeking large scale office buildings, and high quality retail assets, attracted by the safety afforded by one of the most liquid, politically stable and transparent global markets.
• Also attractive to investors is the on-going strong demand for core West End office, retail and leisure space from both local and international occupiers. The core West End has the healthiest five year rental growth outlook of all the major office markets in Europe, with the exception of London City.
• Appetite from international retailers for new flagship retail space has resulted in rental growth prospects for core West End prime retail being second only to the power retail market of Moscow, over the same time period.
Guy Grainger, CEO of JLL UK, who presented the report, claimed that shoppers were more demanding than ever, and know exactly what they want from a shopping experience –including the physical surroundings. He commented on the need for property owners to become engaged with the issue of public realm improvement and said: "East Oxford Street will see significant growth over the next few years. Developers are already savvy to this and have begun multiple projects that will give the area the facelift needed in anticipation of Crossrail's arrival but there are risks.
"Single ownership can achieve great things in terms of public realm, tenant mix and place-makingas we've seen with the work of The Crown Estate and Shaftesbury. The proposed legislation on formalising the contributions of property owners to Business Improvement Districts could provide the structure to implement the cohesive approach needed to rejuvenate areas for the best possible outcomes".
Tony Travers, London School of Economics, was also of the opinion that public real improvement was the key to the continued success of the core West End, he said: "We cannot afford for the look and feel of the West End to be undermined during this age of austerity. When we think of the West End, we need to think of it in the context of its importance to the London economy and the rest of the UK. The area has its own economic ecosystem, and the rest of the UK benefits from its success."
Bridget Roswell gave her view on the report during the event, and commented on the need to 'welcome back Uncle Sam'. She said: "We need to ensure that we focus our efforts equally on mature and emerging markets. It's easy to become infatuated with the obvious allure of the wealthy Chinese market, but America is still one of the strongest economies and a more natural fit for us to work with."
Sarah Porter, CEO of Heart of London Business Alliance, said: "Our capital city has had a strong year amid tough economic conditions. However, despite making such significant contributions to London's GDP, the West End has all too often played second fiddle to the City.
"As we look ahead, we must embrace public realm improvements and find new ways to extend investment so the West End continues to grow not just as a retail hub, but a choice destination for culture, leisure and business.
"We eagerly await the recommendations of the West End Commission and trust that strategic leadership and vision will be at the fore, so that local councils, national government and the business community can work together to help the West End fulfil its full potential."
Richard Dickinson, CEO of New West End Company, said: "Whether it's making it easier for Chinese visitors to come to London, extending Sunday shopping hours or building a third runway or a new airport – we need the Government to move forward, be decisive and keeps our economy growing. Then the core West End and the UK will truly benefit and deliver economic prosperity to us all."
The Crown Estate is midway through its 20 year £1bn regeneration of the 4 million sq foot Regent Street portfolio. David Shaw, who spoke at the event on behalf of The Crown Estate is the Head of the Regent Street portfolio. He said:
"Retail is a critical part of our 21st regeneration of Regent Street. To attract shoppers from the UK and overseas we need to deliver a memorable customer experience- this means focusing on flagships that deliver the best fitout, staff and stock.
It's this focus on delivering the ultimate customer experience that makes us to the UK "go to" destination for flagship launches. Over the last ten years we have delivered the first Apple, Banana Republic and Anthropologie outside of the US. This year we will deliver H&M's first ever '& other stories' brand as well the first J Crew store outside of the USA – and there is much more to come"
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