Head of Commercial Real Estate Danny Schwarz and Trainee Solicitor Stephen Dodge explore the proposed pedestrianisation of Oxford Street, and discuss its potential impact on London’s retail and hospitality sectors, in Property Week.

Danny and Stephen’s article was published in Property Week, 2 October 2024, and can be found here.

Facelift will revive Oxford Street

Some shops may lose out, but pedestrianisation plan will broaden iconic retail destination’s tenant mix.

Last month, London mayor Sadiq Khan announced radical plans to pedestrianise London’s iconic Oxford Street. This proposal, Khan’s second for the famous high street, appears likely to succeed thanks to a Labour-led Westminster council, and for Oxford Street the timing could not be better; it is ripe for revitalisation.

The pandemic resulted in a slew of notable Oxford Street shop closures. With tourism statistics showing footfall is still yet to fully recover, it is clear that the retail district is struggling. This is hardly surprising; Oxford Street is often not London’s most desirable destination. Its pavements are cramped, the thoroughfare is plagued by antisocial drivers and the shopfronts are infested with much-derided American candy shops.

So, how will pedestrianisation breathe new life into Oxford Street? Case studies on the pedestrianisation of locations such as nearby Carnaby Street or Copenhagen’s Strøget Street are telling. Despite objections from business owners, particularly restaurateurs, these streets were closed to traffic and experienced significant increases in footfall. Local businesses benefited from an increase in customers.

However, there are risks involved in this latest proposal for Oxford Street. Prior to the announcement of plans for pedestrianisation, the post-pandemic rebound was in full swing on the street. Property vacancies are down 40% from 2023, with leasing activity breaking records in that year and remaining high now. With rents rising for commercial tenants on and around Oxford Street, mere speculation on the pedestrianisation proposal is likely to see rents continue to spike. The value of freehold titles could similarly creep upwards.

Tenants subject to upcoming rent review may see rates rise far beyond their short-run means and there is a risk that landlords may see an opportunity to trade up tenants, exercising break clauses to hike rents. Property lawyers will be busy with a flurry of breaks, renewals and disputes.

However, tenants on fixed rents may be buoyed by increased footfall and have a highly profitable few years. Tenants with high-volume businesses also stand to win regardless of their rents, as greater footfall will correlate directly to sales.

Winners and losers
Unfortunately, not everyone will be a winner as a result of Khan’s proposal. Low-volume luxury shops are often more reliant on patronage from customers who arrive by car and may prefer to move elsewhere, as their clients will not wish to brave crowds. At the other end of the spectrum, accessibility will be hampered by pedestrianisation, further inconveniencing those reliant on cabs or buses.

If these long-standing and successful luxury businesses fail, landlords will be seriously affected. Those who relied on the status quo, and did not obtain adequate guarantees or security at their last lease renewal, may also find themselves as low-ranking creditors in protracted insolvencies.

What is clear is that disruption creates opportunity and Oxford Street has already begun to change – no longer are all leases on the high street exclusively for retail use. Parts of John Lewis and similar buildings are being converted to office space, bringing a new type of consumer to the area, while parts of Debenhams are being converted for leisure use, alongside the openings of new entertainment venues. Spaces left behind in the ongoing – and welcome – retreat of American candy shops are similarly ripe for conversion into cafés, which could apply for pavement seating.

A new type of tenant, with a new clientele and different priorities, is coming to Oxford Street. Landlords may find it difficult to adjust to this new normal, but those who can be flexible and see the potential in their new tenants stand to gain from the new face of London’s iconic retail district.

If you would like further information regarding your obligations as tenants/landlords of retail spaces, please contact a member of our Commercial Real Estate team.

Director and Head of Commercial Real Estate, Danny Schwarz, and Solicitor Sophie Levitt discuss the potential impact of the proposed outdoor smoking ban on the hospitality sector, as well as the legal implications for landlords and tenants, in The Times.

Danny and Sophie’s article was published in The Times, 26 September 2024.

Ministers are considering imposing stricter rules on outdoor smoking to reduce the number of preventable deaths connected to tobacco use. There are no final plans, but smoking could be banned in pub gardens, outdoor restaurants and sports grounds.

The proposed ban appears as a puritanical tendency to reach for authoritarian solutions to complex public health problems. When politicians choose to cement their intolerance of the behaviour of others through legislation, it restricts individual freedom, further eroding people’s right to choose what they can do and where they can do it.

Arguably, such misuse of state control is antidemocratic: an extreme anti-smoking agenda which is not supported by scientific evidence that smoking in the open air creates any quantifiable threat to public health.

And now the British Beer and Pub Association (BBPA) is pleading with the government to abandon plans for greater smoking restrictions in pubs since it would affect their viability as businesses. But not all pubs would be impacted equally by such a ban. For instance, gastropubs are less worried about a slowdown following the ban, given the focus of their business on serving full meals, typically indoors.

While there is some disagreement within the hospitality industry regarding the precise impact of such a ban, there is a broad consensus that beefed up rules need to be clearly worded and ‘outdoor area’ must be precisely defined to minimise uncertainty.

A pub garden smoking ban could affect both landlords and tenants. If the ban has a heavy impact on the viability of tenants’ businesses, they may be unable to generate enough income to pay their rent. Landlords may have to forfeit leases, leaving them with vacant possession and the need to remarket the property.

Tenants would be obliged to comply with the smoking ban, which could be outlined expressly in leases or implied under a compliance with laws clause. If the tenant used the property in a manner which was not permitted, the landlord could forfeit the lease and end the unlawful use. Alternatively, the landlord could claim damages if they suffered any loss because of the tenant’s breach.

While the government’s proposals have received support from public health experts, many landlords, operators and customers have voiced concern that the rules would be unenforceable.

Bar staff would have to police this ban in addition to their existing obligations. Smokers would crowd on pavements outside of pubs, which would cause disturbance and nuisance to neighbours, or breach licence conditions, particularly in residential areas. Smoking could also be prohibited in parks and therefore create confusion in public spaces as it would be difficult to police.

If you are needing advice on matters relating to the hospitality sector or the legal obligations of landlords and tenants in commercial real estate, please contact a member of our Commercial Real Estate team.