The landlord responsible for Carnaby Street, Shaftesbury, has said that the demand for bigger buildings in London’s West End is waning amid economic and political uncertainty,
The company revealed that while the need for smaller accommodation is good, its larger buildings challenged potential tenants to “to commit to significant investment in fit-out and substantial rental commitments”, signifying that the leasing activity has been more muted in recent months.
It stated that even though it was confident in its ability to acquire tenants for some of its new developments, it was taking much longer to complete the deals.
It is yet to look for tenants for its large Thomas Neal’s Warehouse near Covent Garden almost one year after the building was finished.
A further project in Chinatown is also being marketed. The said scheme is completed in May.
Even though the company asserted that the capital’s West End is underpinned by an appeal that is ongoing to both Londoners and those visiting the city, who flock each year for restaurants, shops, and theatres. The population of overseas tourists in the city grew over the summer thanks to the decline in the value of the sterling, which made visiting the United Kingdom more attractive.
An analyst at Liberum, David Brockton, said that trading conditions were still “buoyant” despite the potential difficulty of Shaftesbury in looking for occupiers for space.
“While this has some negative inference for wider London letting conditions we believe it is, in part, a function of management’s deliberate selectiveness in seeking to select occupiers which fit with the Shaftesbury estate,” said Shaftesbury.
On Monday, shares in Shaftesbury were flat at £10.12.
The company has continued to expand its city centre holdings. Since April, it has acquired two restaurants for £9m, bringing its total amount of purchases for 2017 to £37.1m. It has also signed a deal to acquire a building on Soho’s Berwick Street which is being redeveloped into a restaurant, a 110-bedroom hotel, and supermarket which will open in 2018.