Record West End retail rentals for landlord GPE but it swings to loss
Central London is the place to be if you’re renting prime commercial and office space. Demand is sky-high and in Wednesday’s year-end results, key landlord GPE referred to its “strong strategic positioning with flight to quality delivering success”. That means a record £55.5 million worth of lettings over just one year.
With a vast portfolio of retail space across London’s West End, those record lettings still couldn’t prevent the real estate investment trust from swinging to a fiscal 2023 loss after a negative revaluation of its investment portfolio.
It cited “elevated political and economic uncertainty” and, of course, a series of interest rate rises that has taken its toll on the wider property sector.
So there was a pre-tax loss of £164 million to report for the year ended 31 March from a profit of £166.7 million the year prior. It also posted a deficit of £145 million from the revaluation of its investment properties after posting a surplus of £107.9 million a year earlier, “driven by macroeconomic disruption”.
The company said its property portfolio valuation fell 6.6% over the year to £2.4 billion.
But there was some good news on the revenues front, rising to £91.2 million from £84.2 million a year ago.
For the year, GPE described its retail leasing performance as “strong” with the overall retail vacancy rate down from 20.4% to 5.5% over the year. Key lettings occurred at 70/88 Oxford Street, where it has let a new London flagship store to Reserved (19,645 sq ft) plus units for jewellery brand Pandora (3,675 sq ft) and The Fragrance Shop (2,300 sq ft).
It also secured further retail lettings to premium brands on New Bond Street, including Dsquared2 (4,700 sq ft) and Hackett (2,350 sq ft).
But GPE said retail supply could be a problem: “Despite heightened levels of uncertainty, we expect current trends to continue, with demand for the best space outstripping supply and a greater need for smaller spaces to be provided on a flexible basis. Buildings that are unable to meet this evolving demand, particularly in the face of competition from growing secondary supply, will underperform. The gap between the best and the rest is likely to widen further,” it explained.
It added that London’s West End is seeing higher numbers of both domestic shoppers and tourists, supported by the opening of the Elizabeth Line rail network.
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