July 2025
As construction costs soar, development finance remains high, and general viability becomes more challenging, large-scale developments are facing increasing difficulties. At the same time, retail demand and rents have seen a resurgence.
This raises the question: is agreeing longer term retail leases a more viable option than large-scale development?
Notable examples of this strategy include British Land’s Eden Walk in Kingston, where a planned redevelopment was recently postponed in favour of securing long-term retail leases, and The Broadwalk Centre in Edgware, where Ballymore has unexpectedly become a shopping centre landlord, as rising retail values have surpassed the viability of wider redevelopment.
Similar decisions are being made across London on a smaller scale. The M&S stores in Brixton, Chiswick, and Putney were previously earmarked for redevelopment, but long-term leases have now been agreed. GCW advised the landlords on Chiswick and Putney.
Meanwhile, in Wimbledon, supermarket chain Morrison’s signed a new 15-year lease on a 33,000 sq ft unit at The Broadway. Landlord Threadneedle had floated the idea of redeveloping the scheme, but this signing, along with other recent lettings, has seen it refocus on the centre’s future.
While development feasibility remains a challenge, a key driver of this shift is the strength of London’s occupational retail market and its impact on investment values. This strength is driven by several key trends:
Occupier Demand & Expansion.
This demand is partly driven by the above factors, but at present, major retailers - including TK Maxx, Primark, Aldi, Lidl, Dunelm, Sports Direct, Sainsbury’s, and Tesco - are actively seeking new sites in London. GCW have been involved with transactions with all these occupiers over the past 12 months.
While the decline of department stores has created expansion opportunities outside the Capital, for these retailers to continue meeting growth targets, they are increasingly focusing within the M25. The shortage of large-footprint, well-located retail units in London has intensified competition, and placed upward pressure on rents.
Retail Parks, What Retail Park?
In a complete U-turn, retail park landlords and agents are now welcoming retailer insolvencies as opportunities to push rental values higher and improve tenant mix. Landlords can take this approach because, generally, retail parks are trading well - often at the expense of town centres and high streets.
However, in London, where there are far fewer retail parks, consumer spend, and retailer demand remain concentrated in traditional high street and shopping centre locations. Reduced car ownership and higher traffic volumes also make retail park shopping a less attractive option.
In addition to this, many of London’s retail parks face long-term uncertainty due to redevelopment plans. While longer-term leases have been agreed at Kew Retail Park, delaying development, others are actively being transformed. Hurlingham Retail Park in Fulham is currently under redevelopment, while Swandon Way in Wandsworth, formerly home to B&Q and Homebase, has already been replaced by over 1,000 homes.
Convenience & Accessibility.
London has one of the highest rates of public transport usage in Europe, accounting for 80% of commuter journeys into Central London. This presents a unique opportunity for retailers to capture consumer spend at key moments in a commuter’s journey, something far less common outside of London.
The convenience of these transactions also helps level the playing field against online shopping, particularly for items that don’t fit through a letterbox or require immediate collection. With working days in the office on the rise, this factor is becoming of more significance.
This trend positively impacts bricks & mortar store sales, improving occupier affordability and supporting rental values.
Tourism.
In 2023, an estimated 38 million international tourists visited the UK, spending £16.7 billion in London. While the main attractions are in Central London, accommodation is spread across the city, with the number of hotel rooms continuing to rise.
This level of tourism provides retailers with potential customers that other UK cities do not benefit from, and in turn, has an impact on sales, affordability, and rental values.
Conclusion.
In recent years, retail has experienced falling rental and capital values. On the back of this, landlords have defaulted to repurposing retail assets for alternative uses in response to a shift in market conditions. However, with London’s retail market demonstrating strong fundamentals, long-term leasing strategies are becoming increasingly viable.
Retail is performing well, occupier demand is strong, and key structural factors - including tourism, public transport usage, and convenience-driven spend - continue to support the sector.
GCW strongly believe in the Greater London retail market and have advised landlords on assets of varying scale across the Capital.
London deals over the last 12 months.
156-164 Clapham High Street: M&S signed a 20-year lease on an 8,000 sq ft ground floor unit, plus 4,000 sq ft basement ancillary, paying a rent of £700,000 per annum.
3-8 Southampton Street, Covent Garden: GCW worked on behalf of Barings, to let a 6,000 sq ft ground floor space with 4,000 sq ft basement ancillary to M&S, paying a rent of £750,000 per annum.
Hammersmith Broadway: Sainsbury’s Local signed a 15- year lease, with an agreed base rent of £375,000 per annum.
38 Clarence Street, Kingston- Upon-Thames: Letting of a 12,000 sq ft former River Island to Deichmann with a new 10 year lease agreed at a rent of £325,000 per annum.
Fulham Broadway: On behalf of CBRE IM, GCW let a 12,000 sq ft unit to Aldi. Rent agreed at £400,000 per annum.
A listed, former ticket hall let on new 30-year lease to JD Wetherspoons at a rent of £300,000 per annum.
136 Streatham High Road: Waterstones have opened in the former bank, paying a rent of £132,500 per annum.
147 Chiswick High Road: A 10-year lease agreed with Loaf on a former Sofa Workshop unit at a rent of £160,000 per annum exclusive.