The number of stores on London's Regent Street will be cut by almost a fifth over the next three to four years to create larger units suited to international retailers seeking flagship shops, the street's owner told Reuters.
The plan is part of a makeover of the shopping district to attract retailers such as U.S. clothing brand J. Crew, David Shaw, head of Regent Street portfolio at the Crown Estate, told Reuters.
We've reduced the number of shops from 144 (in 2002) to 118 and our plan is to bring that number ... down over the next three years to four years to around a hundred, Shaw told Reuters.
The reduction will be achieved by redeveloping existing blocks so they house fewer retailers, taking advantage of the Crown Estate's right to buy back shops from retailers that exit their leases, he said.
The Crown Estate, which manages the monarch's property holdings and is one of Britain's biggest landlords, has been undertaking a makeover of Regent Street since 2002 and expects to spend about 1 billion pounds by 2020.
J. Crew is on our target list and I was in San Francisco and Los Angeles three weeks ago having meetings with retailers that we would like to attract to the UK , Shaw said.
Retailers with stores already on Regent Street include Apple Inc, Banana Republic and world-famous toy shop Hamleys. There are no vacant units on the street at the moment, Shaw said.
The Crown Estate is planning to open a mixed-use block called Quadrant 3, which will be the new home of menswear brands such as Jack Spade and Woolsey, as well the offices of former U.S. vice-president Al Gore's Generation Investment Management, media reports said.
The further reduction of sites will likely frustrate overseas retailers not yet in central London. Strong demand means significant premiums are paid for the best spots on London's best shopping streets, including Oxford Street and Bond Street. Some are expanding into peripheral shopping streets as a result.
Data from property consultancy Cushman & Wakefield showed that zone A rents on Regent Street, which currently peak at 550 pounds per square foot, could rise to 700 pounds by 2013. Zone A rents on central Oxford Street, currently 715 pounds per sq ft, may rise to 740 pounds by 2013, Cushman said.
You've got record levels of demand for Regent Street in the sense that there are no vacant units, so the natural logic is that rents could go up further, said Duncan Gilliard, who works on Cushman's central London leasing team.
It was highly possible that Zone A Regent Street rents could exceed 700 pounds in 2013 as a result of the reduced supply, he said.
Last year, Crown Estate sold a 25 percent stake in Regent Street to Norway's sovereign wealth fund for 448 million pounds, allowing it to fund property developments.
(Editing by David Holmes)
(This story was corrected in the headline to reflect the correct currency conversion from $1.6 billion to £1 billion pounds)