Shaftesbury reports 'buoyant' West End, but niggles over larger properties
Decision making for larger properties in London's West End is being hit by the lack of political and macroeconomic certainty, Shaftesbury reported, though demand for smaller spaces is good.
FTSE 250
19,799.72
16:59 23/04/24
FTSE 350
4,424.29
16:59 23/04/24
FTSE All-Share
4,378.75
17:14 23/04/24
Real Estate Investment Trusts
2,260.98
16:59 23/04/24
Shaftesbury
421.60p
16:44 03/03/23
Shaftesbury said "current political and macro-economic uncertainties are now showing signs of slowing occupiers' decision-making processes" and that although there was interest in its larger retail and restaurant space, "the time taken to conclude larger lettings is increasing".
For example, occupiers have yet to be found for the large Thomas Neal's Warehouse in Seven Dials, near Covent Garden, a year after being completed.
But the developer stressed that it "will be patient in selecting occupiers that meet our long-term objectives".
The company assured that the West End continued to be underpinned by an ongoing appeal to Londoners and domestic and international visitors, as well as its diverse business community.
"The West End has been busy throughout the summer, with a notable increase in overseas visitors, who are benefiting from the weakness in Sterling. Although national consumer spending trends are unclear, trading in our locations continues to be buoyant," the company said in a trading update on Monday.
On its other larger developments, the FTSE 250 group said it was "well advanced" in talks to let out two of three restaurant spaces in its Central Cross building in Chinatown, with three of four smaller cafés let or under offer, and retail units attracting "considerable interest".
Also positively, the retail and restaurant units at 57 Broadwick Street in Soho are already under offer ahead of handover from the contractor expected shortly, with handover of the office accommodation anticipated for early in 2018.
For smaller accommodation, lettings, lease renewals and rent reviews are being concluded "on terms in line with expectations, and vacancy levels remain low".
Since the beginning of April 2017, Shaftesbury has acquired two restaurants for a total cost £9m to bring total purchases for the financial year to £37.1m, and has signed a contract to forward purchase a long leasehold interest in 90-104 Berwick Street, Soho, which is being redeveloped into a supermarket, restaurant and a 110-bedroom hotel by late 2018, with both the hotel and supermarket pre-let.
A small mixed-use building has been sold in Covent Garden and five apartments, totalling £7.6m and 8.9% above book value.
Shaftesbury shares were down 4p to 1,008p just before 0930 BST on Monday.
“If you could produce a trading update to reflect the economic effect of Brexit so far, Shaftesbury has done in a very concise way," said analyst Neil Wilson at ETX Capital, with the weak pound boosting demand across its portfolio significantly.
"The West End is completely insulated from any concerns about UK consumer spending as it is dominated by tourist money. And indeed Shaftesbury’s unique portfolio has always proved very resilient to previous slowdowns - a factor behind the premium the stock commands.
On the other hand, he noted the uncertainty is slowing decision-making which means it is taking longer to conclude larger lettings.