LONDON'S position as the world's most fashionable city is attracting leading designers. Yes, the West End retail sector is booming again.
But while the most fashionable area of the most fashionable city in the world is attracting top overseas fashion houses, success has meant that the niche Covent Garden area is being forced to alter its image to keep pace.
In an increasingly confident West End property market, it is the retail surveyors who have most to celebrate. In the past 12 months, the phrase "end of year bonus" has entered their vocabulary for the first time in years.
London's position as the hippest city is attracting the world's top names to the capital's shopping mecca. Chris Phillips, a partner in Healey & Baker retail department, summed up the optimism of West End retail agents: "In 1996, Bond Street, Regent Street and Oxford Street experienced the most active and buoyant market since the peak of the last retail property boom in 1988-89. Strong retail demand and increased consumer expenditure, coupled with a lack of supply, have resulted in significant rental growth, particularly in the last three months.
"Consequently, although some evidence is contradictory, the consensus is that rental levels in these three thoroughfares have finally eclipsed the heights achieved in the late '80s boom."
Bond Street has attracted most attention, not so much for rising rents, but because in conjunction with Sloane Street, it lies at the heart of London's rediscovered role as the centre of the international fashion scene.
Mr Phillips says: "In recent months, a veritable Who's Who of the trendiest fashion names have vied with each other to secure large flagship stores - prime positions having been secured by Ralph Lauren, Prada, Calvin Klein, Versace, Donna Kaian, Loewe and Tommy Hilfiger in particular.
Size is the buzzword, with a number of these flagships being more than 10,000 square feet, many being fitted out to standards that will achieve new levels of interior design and price per square foot.
At 51-52 New Bond Street, The White House is relocating its 20,000 square feet to make way for Tommy Hilfiger. Not to be outdone by foreign competition, UK arrivals include Reiss at 78-79, Jigsaw (126-127), and David Morris at 180 New Bond Street.
The increase in requirements has had its downside. With their demand for larger units, the retail multiples are starting to threaten one of London's most characteristic retail areas. Traditionally, Covent Garden has been the home of the small retailer. The area's blend of independent operators has made the old fruit market one of London's most vibrant shopping destinations. But the market may become a victim of its own success.
Stewart Ross, head of research at Montague Evans, says shoppers have always been attracted to the area by its retail mix, but in the past two years, as consumer confidence has grown and fuelled a rise in retail sales, rents in the area have soared.
The prime locations on Neal Street, James Street and Long Acre have seen Zone A rents reach £300 sterling per square foot - and the market is set to go higher as the multiples start to get a grip on the area.
Mr Ross says: "Many larger retailers have keen frustrated for many years by the lack of larger units. However, as a result of site acquisition over the years, many of the smaller units may now be redeveloped so as to satisfy market demand."
The recent decision by Marks & Spencer to take a new 33,000-square-foot store on the site of the old Covent Garden General Store highlights the coming trend. M & S will pay £25 per square foot. The redevelopment will also create a unit of 7,000 square feet on Long Acre and a second unit and restaurant of 4,000 and 7,500 square feet respectively on Neal Street.
In Oxford Street, traditionally the home to UK multiples and department stores, retail demand and rental growth has been as buoyant as Regent Street and Bond Street, with some exceptional transactions agreed in recent weeks.
To the west of Oxford Circus, landlord CIN La Salle acquired the leasehold interest in Ravel's 2,500-square-foot store at 248 Oxford Street. Following an informal rental tender, 11 bids were received, the successful tenant being Allsports, which is paying a record rent for the street of £380,000 a year. To the east of Oxford Street, the biggest transaction was the letting by Henley & Baker of about 30,000 square feet on behalf of Littlewoods to Next for its biggest UK store yet.
Regent Street, where availability of space is extremely tight, saw a new opening by Hugo Boss at 184 and Karen Millen shopfitting at 262. All eyes are on the disposal of the 17,000 square-foot Burtons store at 114-120 Regent Street, which offers accommodation for a retailer willing to offer in excess of a £1 million premium to establish a flagship store.
London's retail agents now rely on the continued confidence among shoppers and retailers in the West End.
While London remains the world's hippest city, they do not appeared concerned.
