Building on success. An overview of the Fitzrovia local economy

Transcription

1 Building on success An overview of the Fitzrovia local economy

2 FITZROVIA AN ESSENTIAL COG IN THE WEST END ECONOMY Fitzrovia is an essential cog within the West End economy. The district makes a significant economic contribution to the core West End which itself accounts for 20% of London s annual GDP. Our work as a Business Improvement District demands an in-depth understanding of Fitzrovia s commercial environment. So, in autumn 2013, we commissioned an independent assessment of the area s current and future provision from leading economic analysts CACI. The study provides information about those who work, live, and visit Fitzrovia. It explores the key economic sectors retail, food and beverage, and office and incorporates Cushman & Wakefield s tracking of rental market prices and their suggestions of future trends. After some of the toughest economic challenges any of us can remember, Fitzrovia has emerged more diverse and exciting than ever. What better time to take stock? Our economic report offers a health check for the district now and some timely reflections on its future. As a demonstration of partnership in action, we are extremely proud of it. As a piece of work the report will allow The Fitzrovia Partnership to promote the district more effectively, embrace the needs of local businesses and develop a positive environment for future investment. The result is a diverse and vibrant, local economy that retains and attracts key businesses and a suitably skilled workforce. James Thompson - Retail Director, Heal & Son 3 Lee Lyons - BID Manager, The Fitzrovia Partnership

3 A201 DEMOGRAPHICS Population & Housing South And West Hampstead The residential community within and around Fitzrovia has a significant influence on its overall economic make-up. 4,200 people are resident within the Fitzrovia BID area. Nearly 175,000 live within 1.5 miles and, by 2024, that figure will have risen by nearly 23,000. Warwick Avenue The residential contribution to the local economy is important. The preponderance in the housing mix of single city sophisticates and investors, with above average disposable income, boosts the area s spend potential. Such local residents also tend to be driven by quality rather than price. Average house prices are very high, for London and the UK. At the same time there is a concentration of more affordable housing, particularly in the north-east of the area, and pockets of deprivation, although they are small in percentage terms. B410 B507 Warwick Avenue South Hampstead A40 A5 Paddington Paddington Bayswater Saint John's Wood A4209 A5205 Lancaster Gate A402 Edgware Road (Bakerloo) Marylebone B319 Edgware Road (Circle/District/H&C) South Marylebone Hyde Park Knightsbridge Baker Street Marble Arch B310 A4202 Mayfair Belgravia 4 A3217 A5 B406 A4201 Bond Street B506 A302 A400 Camden Camden Town Town North Marylebone Regent's Park West End Hyde Park Corner A3214 A4 A4200 A400 Oxford Circus Green Park Camden Road B512 Regents Park Mornington Crescent A4200 A5202 Euston Euston Square Warren Street Goodge Street B327 Soho B404 A3212 A302 B401 B504 B402 A308 B514 Saint Pancras Grays Inn Tottenham Court Road Covent Garden Piccadilly Circus Strand Saint Pancras International Holborn Holborn Holborn-Strand-Covent Garden Covent Garden Leicester Square London Saint James's Park Bloomsbury Russell Square Charing Cross Embankment Westminster Caledonian Road and Barnsbury A3200 A301 Barnsbury B400 Temple 15 B500 A23 Lambeth North A3202 A401 Chancery Lane Temple Clerkenwell Fleet Street Waterloo East Waterloo Waterloo A1 Islington Angel A501 B501 A3211 B502 Farringdon Blackfriars Finsbury Clerkenwell-Finsbury-Barbican A1 City Thameslink Blackfriars Southwark A300 Essex Road Barbican A3201 B B144 Saint Paul's B300 A2 A3 A1200 B100 A2198 B102 B101 A5201 Barbican Old Street City of London Bank Mansion House 80,000+ Southwark 0 Borough Fitzrovia BID Area 0.5 Mile Radius South Bank 1.5 Mile Radius Population Density 0 to 20,000 20,000 to 40,000 40,000 to 60,000 60,000 to 80,000 Moorgate Moorgate A10 Cannon Street St Pauls Monument Metres A2205 A London Bridge Data Source 2012 TomTom 2013 CACI Limited and all other applicable third party notices can be found at Liverpool Street Bermondsey DID YOU REALISE? BID residents have an affluent Acorn profile*. 54% are City Sophisticates and there is an above average representation of Lavish Lifestyles, the most affluent category. Within 1.5 miles, City Sophisticates represent over 53% of households (Greater London average is 19%) Lavish Lifestyles making up 4.7% (UK average is 1.1%). The average local household spends over 10,000 on all retail goods and a particularly high percentage on house & home goods, reflecting in part the numbers of young and affluent residents setting up their first home. The BID area contains 1,522 households and a resident population of approximately 4,200. The most dominant group are males aged Unemployment within the BID stands at 1.5%. Most of the 2,069 people in work are in white collar jobs, with over half of these in senior or professional positions. Around half of Fitzrovia s working residents walk or take the tube to work. 8.5% travel by bus and 12.6% work from home. According to the 2012 Census, the BID area is predominantly white (2,777) with a sizeable Asian presence (783). Christianity is the largest observed faith (1,791) followed by Islam (495), 1,000 individuals following no religion. * See page 12, Acorn Consumer Classification % of Household / Respondents 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Lavish Lifestyles Source: CACI Acorn Affluent Achievers Executive Wealth Mature Money City Sophisticates There are 1,522 households within the BID area, increasing to 79,898 within 1.5 miles. 30% of homes are either owned outright or with a mortgage, 29% are socially rented and 33% privately rented. Two-adult families predominate over single-parent units. The local population is set to increase by 13.7% over the next 10 years. 5 Rising Prosperity Career Climbers Countryside Communities Successful Suburbs Comfortable Communities Steady Neighbourhoods Comfortable Seniors Starting Out Student Life Modest Means Financially Stretched 1.5 Mile Radius Greater London UK Striving Families Poorer Pensioners Young Hardship Urban Adversity Struggling Estates Difficult Circumstances House values are higher than the London average. They reach their peak around the centre of the BID area, where the 950,000+ average price reflects the number of high-net-worth residents. Although the north east of the BID area is home to above-average numbers of high-net-worth individuals, it has pockets of social housing and student accommodation.

4 EMPLOYMENT Over 128,000 people work within 0.5 miles of the Fitzrovia BID area the distance it is assumed most are willing to travel to shop, eat or socialise during lunchtime or after work. This workforce is a significant driver for the local economy. As part of the LB Camden, Fitzrovia has access to a working population of 304,000 across 25,000 businesses, mostly in the Knowledge Economy of those working within 1.5 miles of WORKFORCE ACORN PROFILE High proportions of more affluent ACORN groups working in the area than the London average 40% 35% 30% 25% 20% 15% 10% 5% 0% Wealthy Executives Wealthy Achievers Urban Prosperity Comfortably Off Moderate Means Hard Pressed Affluent Greys Flourishing Families Source: CACI Workforce ACORN Prosperous Professionals Educated Urbanites Aspiring Singles Starting Out Secure Families Settled Suburbia the area most fall into the top three professional occupation Acorn categories; 21% are managers & senior officials, 24% professionals and 23% associate professionals and technical. Unemployment within the BID stands at just 1.5%, reflecting the general affluence of local residents. Within 1.5 miles unemployment stands at 4.9% compared to a Greater London average of 7.6% and UK average of 6.1%. % Worker Population - FBA 0.5 Mile Radius % Worker Population - London Prudent Pensioners Asian Communities Post-Industrial Families Blue-Collar Roots Struggling Families Burdened Singles High-Rise Hardship Inner City Adversity DID YOU REALISE? The West End has the highest Comparison Goods spend among workers anywhere in the UK. Almost 40% of local workers within 0.5 miles of the BID can be classed as Educated Urbanites, young, well-off and highly qualified. The workforce contains a higher proportions of the more affluent ACORN groups than the London average. Wealthy Executives represent 6% of all workers compared to a London average of 2% and Flourishing Families account for 4%, against 2%. Those in the Moderate Means and Hard- Pressed categories are under-represented when compared to the London averages (21% versus 31%). The Fitzrovia office market is a traditional Media location and this has been reflected in leasing patterns. Leasing activity has been dominated by Media & Tech companies, who have accounted for 42% of all space leased over the last five years, followed by Retail & Leisure companies (20%) and professional services (16%). 30% of workers walk to work, 24% take the tube and 15% take the bus. Fitzrovia area has a high worker density. It is particularly high in the southern and central parts of the district with over 200,000 workers per sq mile. OFFICE Fitzrovia has traditionally attracted Media & Technology businesses, large and small, and they still dominate, leasing 42% of all office space over the last five years. The area s market is generally driven by units of less than 5,000 sq ft. These have accounted for 80% of all transactions, and 72% of all Media & Technology deals, in the last five years. There are some 4.5 million sq ft of units over 5,000 sq ft in the area with around 141,000 sq ft currently available. An estimated vacancy rate of 3.1%, compares favourably to the West End s 4.3%. Trends and Prospects Average rental values for units over 5,000 sq ft have remained stable for the last two years at around 38/sq ft. Top rents have risen from 50 to 60/sq ft with one or two smaller transactions in 2013/14 achieving headline rents of 66.50/sq ft. Rents are lower than the wider West End and other central locations but often too high for start-up companies who prefer more affordable areas such as Shoreditch s silicon roundabout. As top rents increase, many traditional occupiers will look for properties that reduce costs per employee by increasing occupational densities. A number may be priced out of the area and relocate eastwards. Location decisions are based primarily on price and access to skilled labour. Other important factors include the ability to attract and retain talent, opportunities for increasing sales and revenue, personnel costs and accessibility to public transport. Only 20% of companies cite clustering as a factor. Traditional destinations are likely to lose out to emerging alternatives that meet more critical location drivers. The annual average take-up of space in Fitzrovia over the last five years stands at 390,000 sq ft. As in the wider West End, with the exception of 2012, leasing activity increased despite the recession. Lack of supply, (apart from units between 40,000 and 49,999 sq ft) hinders leasing activity. Current developments are unlikely to address this short-fall. During 2013 activity was subdued, mirroring the rest of the West End, and the increasing tendency for occupiers, especially in the Media & Technology sector, to seek cost-effective space Bloomsbury has an unemployment rate of 8.4%. 6 7 further afield. The leasing of commercial property is the main driver across Central London as business continues to feel the impact of the economic situation. Crossrail will be a key investment driver for the office market, with increasing accessibility to the rest of London helping to attract and retain key skills. Source: Cushman & Wakefield/CACI, 2013 Public & Government 2% TMT 42% Banking & Financial 3% Other 13% Manufacturing 4% Media and Technology is the dominant sector Professional Services 16% Retail & Leisure 20%

5 RETAIL Fitzrovia sits on the very edge of the West End s main retail pitch and accounts for 6% of its retail offer. The wider West End Retail Footprint is the largest in the country with an annual Comparison Goods market potential of 4,868.3 million (residents, tourists and workers combined). Its retail pitch is currently focused around the Oxford Circus underground station. The value offer pitch has historically been concentrated around east Oxford Street. This is likely to change with the opening of Crossrail, which will significantly increase the number of annual passengers using Tottenham Court Road station, which currently stands at 34.5 million compared with 70.1 million for Oxford Circus and 36.9 million for Bond Street. 8 DID YOU REALISE? The Fitzrovia BID area is dominated by mass market retailers (72%). Only 9% of the area s stores, mostly durable goods retailers, are considered premium. This retail mix contrasts with the demographics for local residents and workers and differs from the West End as a whole which is 64% premium. Fitzrovia s most visited shops are the grocery stores Sainsbury s Local, Tesco Express, and Little Waitrose average spend is low, suggesting top-up or lunch purchases. The percentage of electrical goods retailers is far higher than in the wider West End (9% compared to 1%). Conversely, the West End has far more Clothing & Footwear units (20% compared to 4%). Vacancy rates in Fitzrovia are 12%, below the UK average of 14.1%, although they are skewed by high rates in particular streets such as Cleveland Street (39%) where there are ongoing construction works.* The West End maintains its retail dominance. Westfield London is its biggest competitor, capturing a comparatively small 3.4% market share, followed by Westfield Stratford City with 3.3%. The area has a stronger food & beverage offer and most consumers see it as a social hub rather than a shopping destination. With Crossrail and other developments taking place during the next decade this image is likely to change. The West End Catchment Fitzrovia BID Area 6% London West End 94% Source: CACI Analysis % of Retail Footprint Score Multiple 69% Tottenham Court Road Areas - Independent vs Multiple 9 Independent 31% The Challenge Retail Fitzrovia is undergoing an identity crisis. Take Tottenham Court Road. Once London s leading retail destination for electronics, it has particularly been affected by on-line retailing and its derivatives. Our challenge is to re-establish an identity for the street. Crossrail and the regeneration of east Oxford Street will provide a significant stimulus. There is a desire to see more independent retailing in Fitzrovia which would help differentiate the area from other parts of the West End. Homeware 35% Leisure 7% Financial 7% Tottenham Court Road - % of Retail Units Eating & Drinking 28% Other Retail 8% Health & Beauty 7% Convenience Goods 8%

6 FOOD & BEVERAGE The food & beverage provision is one of Fitzrovia s unique selling points. Charlotte Street has something that the rest of the West End does not have a diverse, high quality catering offer. Fitzrovia has a much stronger catering pitch than it does retail. LONDON WEST END CATERING PITCH Fitzrovia competes with Soho for the best catering pitch in the area Unlike retail, Fitzrovia is part of the West End s prime catering pitch. While Charlotte Street is the hub of this however, it does have to compete with alternatives and in particular the strong offer of Soho. Unlike Charlotte Street, Soho is famous for its eating and drinking offer amongst residents, workers and tourists alike. DID YOU REALISE? Restaurants, cafes, bars, and clubs account for over 40% of Fitzrovia s total offer. Catering conversion for Fitzrovia is 38%, relatively high compared with the West End. Average spend, is Workers are the area s main catering users with the highest conversion rate but lowest average spend. Tourists have a high average catering spend of but the lowest conversion rate. 42% of survey respondents use Fitzrovia for eating and/or drinking (in addition to their primary purpose). Charlotte Street and Goodge Street has a vacancy rate of 9% (below the UK average of 14.1%). Rathbone Place is a key location within the Charlotte/Goodge Street Area as it links the footfall from Oxford Street to the strong catering offer within the zone. The Charlotte/Goodge Street zone has the highest unit density in Fitzrovia with 39% of all units within this area. The majority of units in Charlotte Street are mass and independent. Charlotte/Goodge Street has the highest density of premium locations with 70% of all premium units found in this area. Restaurants 67% Multiple 38% Source: CACI Analysis Coffee Shop 3% Charlotte St Area - Catering Category Charlotte St Area - Independent vs Multiple Fast Food/ Take Away 19% Pub 11% Mass 77% Independent 62% Premium 7% Charlotte St Area - Catering Market Position Value 16% The Challenge Attracting footfall is key to consolidating Charlotte Street s positioning as The West End s Food & Drink Quarter. Enticing people to eat and drink in the area can be a challenge, unless they are already primed towards a particular restaurant brand or predisposed to the Fitzrovia offer. Currently, consumers are more likely to turn south into Soho. If they were to explore, however, they would find a high concentration of Premium eating establishments such as Pied A Terre, Bubbledogs, Roka, Charlotte Street Hotel and Elena s L Etoile. Shoppers on east Oxford Street can turn north into Fitzrovia or south into Soho and the appeal of their respective entrances will affect their choice. Rathbone Place has a relatively good catering offer at its Oxford Street gateway, with a Byron and East Street, but has visibility, aesthetics and awareness issues. A shopper could easily miss the street s offering, the post office building and general mix on its west side are uninviting. Many shoppers, even locals, may not be aware of what is available further north. Looking from Oxford Street, Soho Square has much greater visual appeal, making Rathbone Place key to the awareness of Charlotte Street and its hinterland

7 ACORN CONSUMER CLASSIFICATION FUTURE INVESTMENT Acorn helps to analyse and understand consumers in order to increase engagement with their customers and deliver successful strategies. It is a geodemographic segmentation of the UK s population which provides a detailed understanding of the consumer characteristics of people and places across the UK. Acorn segments households, postcodes and neighbourhoods into 6 categories, 18 groups and 62 types. By analysing significant social factors and population behaviour, it provides precise information and an in-depth understanding of the different types of people. Fitzrovia has a higher proportion of affluent Acorn groups amongst its residential and working population compared to the London average. For information, please visit, City Sophisticates These affluent younger people generally own flats in major towns and cities. Most of these are purpose built or have been converted from older terraced housing. Single people and couples with children form the majority of people in this group. Many are graduates and white collar occupations tend to predominate. Ownership of ipads or tablets is double the national average. These people access the internet frequently to keep up with current affairs, shop and download music or films. These people enjoy the lifestyle that comes with living in larger cities with lots of opportunity to socialise. Executive Wealth These are the most affluent people in the UK. The group includes people in high status senior managerial and professional positions. Many are very well-educated individuals, company directors or business owners. The typical family will live in a large house and a good number will own an additional property. They are often financially sophisticated, purchasing a wide range of financial products, or have advisors to do so for them. They are unlikely to have suffered any meaningful impact as a result of the recession. The internet is used for practical research and news-gathering more than for shopping or social activity. Social media will be used more for making business contacts rather than leisure activity. In short these consumers have the money to enjoy very comfortable lifestyles with few financial concerns. Student Life These are areas dominated by students and young people, often recent graduates. Those studying will be living in a hall of residence or in flats or shared houses. There will be little in the way of incomes and some will be utilising overdrafts or be building up debts. Internet use is likely to be extensive whether for their studies, or leisure purposes. Ownership of smartphones tablet and hand-held computers will be well above average. They will find time for going out as well as going online. Their interests may focus around social and leisure activities. Fitzrovia is increasingly attractive to investors and office-based businesses looking to relocate. Significant sites are being redeveloped to 21st century standards, and an enhanced transport infrastructure will improve the area s accessibility for potential residents, workers and visitors. The supply of office space is set to increase. Four major schemes on site, in particular Fitzroy Place (the former Middlesex Hospital), accounts for a total of 342,000 sq ft. Key developments in the pipeline will increase supply and demand. The West End Project which proposes to restore two-way traffic on Tottenham Court Road will have a major impact. The development of the Post Office sorting office on Newman Street is certain to prompt demand for high quality mixed-use space. Derwent London s 1 Stephen Street will include around 3,900 sq m of retail space and 3,800 sq m of cultural space (including a 300-seat theatre). Retail developments across London will have an impact on the West End s catchment. The biggest of these - the Westfield London extension, Vauxhall Nine Elms, Battersea and the Westfield/Hammerson Croydon project - are all in areas from which the West End draws visitors. The Crossrail Effect The West End s retail pitch tends to follow passenger footfall which will alter dramatically from 2018 as the two new Crossrail stations at Bond Street and Tottenham Court Road open. The new Tottenham Court Road station will boost the number of Londoners within a 45 minute journey of Fitzrovia by 22%, as well as making the area more accessible to the wider south-east. As of August 2013, 31.6m passengers a year pass through Tottenham Court Road station equating to a daily footfall figure of 86,933. With the predicted population growth, present estimates for Crossrail use is likely to increase significantly

8 USER SURVEY NEXT STEPS A total of 663 people were interviewed across Fitzrovia s key locations. The aim being to understand better how consumers interact with the area, what they perceive as its strengths, and how they would like it to be improved. Over a third of respondents were in the area for work, 26% of respondents were there for recreational purposes and 23% for Other reasons ( studying being the most common reason). 42% of people use the area for eating and/or drinking (in addition to their primary purpose). The respondents shopping behaviour fits that of a worker/student population well. This population are in the area for work or study during the day and utilising the area s catering offer during lunch and in the evening when they are meeting friends. Frequency of visit to the area is high with 52% visiting more than once a week. 16% of respondents did not know what Fitzrovia was. Only 45%, upon being shown a map of the area, knew what the full extent of Fitzrovia was. Upon finding out the full extent of the Fitzrovia area the number of respondents stating that they visit more than once a week rose from 52% to 60%. The average frequency of visits to the area is 102 times per year. Only a fifth of respondents spent on retail goods, resulting in a low retail conversion rate of 20%. Average spend on retail is strong for the UK as a whole but average for a London centre. Catering conversion was 38% which is relatively high. Average catering spend is currently at 9.20 per person. Residents are contributing the most towards annual spend followed by workers while tourists are contributing the least (despite their high average spend per person). Workers had the highest conversion rate for both retail (tied with residential) and catering but had the lowest average spend in both categories. Grocery stores were the retail categories that most respondents made a purchase in. 60 respondents (45% of all spenders on retail) spent in a grocery store. Average spend was low at per spender. This suggests it is people either buying lunch or doing a top up shop rather than a full grocery shop. Fashion, books and homeware were the next highest spending destinations. Furthermore, homeware had the second highest average spend after art galleries. Surprisingly, electrical goods stores only represented 7% of spenders. Given the reputation that south Tottenham Court Road has as an electronics destination one would expect more people to be shopping at these stores. Tourists have particularly high retail spend but low conversion rates. High street cafes are the most popular catering destinations in Fitzrovia. Independent cafes are another popular destination and had a higher average spend than high street fascias. Workers have high conversion rates but low spend on catering. A third of respondents had or were going to visit Oxford Street in addition to Fitzrovia. The second most popular destination was Piccadilly Circus followed by Covent Garden. Cultural aspects proved to be particularly popular with events (22% of all respondents), art & leisure (16%) and night life (13%) cited as areas that could be improved by many respondents. In terms of retail and catering it was independents that respondents wanted to see more of rather than chains. The economic study undertaken in conjunction with CACI has provided valuable information which will help to benchmark and measure both Fitzrovia and the work of the Fitzrovia Partnership. The study has identified a number of specific projects, which will form part of the Partnerships ongoing work programme: A Crossrail impact study Focus of promotional activity on the core audience that work and live in Fitzrovia and its hinterland To maintain and encourage an affordable office community Attract and retain skills and talent To identify a future retail positioning for Tottenham Court Road Encourage an environment where small, independent and niche businesses can flourish Promote Charlotte Street and its hinterland as one of the West End s premier eating locations To maintain the heritage of Fitzrovia as change takes place Members can access the full report by visiting

9 You can learn more about The Fitzrovia Partnership and all of our services and projects at In association with 13 Fitzroy Street, London, W1T 4BQ Telephone Website This Economic Study is published by The Fitzrovia Partnership, 13 Fitzroy Street, London, W1T 4BQ. Telephone: The figures contained within this publication are correct as of May The Fitzrovia Partnership does not accept any liability for any information contained within this publication which may be incorrect. This publication cannot be reproduced, copied, or distributed in any format without the express permission in writing from The Fitzrovia Partnership. Copyright May 2014.