Oxford Street Strives To Make Ikea Opening The Symbol Of A Long-Term Comeback

As the much-awaited Ikea Oxford Street store debuted today following a lengthy renovation of the Grade II listed building at 214 Oxford Street, it felt like the former ugly duckling of London’s West End retail offer had regained its lustre.

Oxford Street has arguably spent two decades in decline, as landmark stores and department store names were gradually replaced, first by identikit tourist shops and more recently by a proliferation of vape and American candy stores, many the latter often selling counterfeit merchandise.

Since then, attempts to revive the retail thoroughfare have seen the previous council green light the £6M Marble Arch Mound, which was labelled London’s worst tourist attraction, Marks & Spencer get into a public war of words over redevelopment of its Marble Arch flagship, and the Elizabeth Line delivered only after delays more excruciating than a rush hour tube journey during a heatwave.

But with Savills recently calling Oxford Street “full”, a spate of new brands opening flagships over the past 12 months, plus pedestrianisation being debated again, Ikea is looking like the Allen key that finally fixes up a London retail offer that was not so much flat packed as flat broke at the end of the pandemic.

“The investment on the Ikea block is phenomenal, not just from Ikea but also the proposals from Nike for its revamped NikeTown," Savills co-Head of Global Retail Sam Foyle said.

"It’s no secret that Oxford Street, like other major global thoroughfares such as Fifth Avenue, had real challenges postpandemic. But those are bygone days.” 

Savills estimated the vacancy rate at 1.35% at the end of last year, the lowest since the first quarter of 2019. The recovery is strongest west of Oxford Circus — the street's centre point —where vacancy is just 0.8%, with the eastern half at 2.1%.

And more new brands are due to open or are already trading, including New Balance, Holland & Barrett, Abercrombie & Fitch, Mango, Moss Bros, Uniqlo, Foot Asylum, Pandora, and Puma, meaning the entire street’s vacancy could dip below 1%.

Rents vary enormously and data is thin on the ground, but on average they peaked at around £850 per SF pre-Covid, dipped to around £625 per SF coming out of the pandemic, and for premimum locations are now nudging back towards £775 per SF for prime space west of Oxford Circus.

“Oxford Street has benefitted from lower rates and rebased rents, and although the loss of the department stores made headlines, the reality is that they were tired and under-invested by the time Debenhams and House of Fraser closed,” Foyle added. “What replaces them will be far better for retailers and the street as a whole.”

Foyle said that the lack of available space on Regent Street helped initially, as has the growing number of brands wanting additional stores, with growth coming from Europe, Asia — where a new wave of Chinese and Korean brands is emerging — and the U.S.

“The bigger issue is now supply, and what looks positive is that there is fresh space coming to market but at a sustainable level. Retailers are looking for uniqueness and footfall and Oxford Street offers both,” he said. “East Oxford Street is developing as its own market, with its proximity to the younger brands in Soho and the F&B there.”

As a result prime rents were up by 25% year-on-year for Oxford Street West and by 33.3% for Oxford Street East in the fourth quarter of 2024, while the intersecting Bond Street has seen flagship openings for Maison Diptyque, Jacquemus, Roberto Cavalli and Moncler, resulting in vacancies down from 6.3% to 2.8% in the year to December.

Flatpack Builds The Street Up

And now Ikea is joining those brands at Oxford Circus in a revamp of the famous intersection, known for three decades as the iconic flagship of fashion retailer Topshop.

The new Ikea span three floors of the 239K SF, seven-storey building, while Nike is revamping its space and will temporarily take over Microsoft’s vacated store, and a 4.6K SF Space NK will also join the line-up. The upper floors are used as offices for both Ikea and other tenants. 

The storied Grade II listed building is 113 years old, completed in 1912 and has served over the years as the Crystal Palace Bazaar and then the Peter Robinson’s department store.

Topshop took the building over in 1992 until it closed its doors in January 2021, and Ikea quickly acquired it for £378M, working for four years to transform the building. The conversion has been undertaken by Ikea's property arm, Ingka. 

The 62.4K SF store space is similar in size to Ikea Hammersmith, its first city-centre store in London. It is divided into a ground floor of edited products, then the basement floors house the traditional room layout, design services as well as a 130-seater Swedish deli and take-out offer.

The Oxford Street store also features a 270 SF Live Studio with broadcasting capabilities, plus a ‘Re-Shop’ and ‘Re-Use’ section for second-life, secondhand and discontinued Ikea products, while a delivery service will also be available. It brings Ikea’s UK portfolio to 21 full-size stores, two city stores, one order and collection and three plan and order points.

Ikea UK Chief Executive Peter Jekelby described the Oxford Street store as “the next generation of Hammersmith” and said that the retailer was committed to opening more outlets in the UK, with plans for a major new site this summer in Brighton at the Churchill Square shopping centre Ingka Centres acquired in late 2023 and smaller outlets in Norwich, Chester and Harlow.

“It will be an Ikea many know and love, with some new features exclusive to this iconic city centre store. After that we will take stock,” he said. “There are still places and space that we could be present in.” 

However, Oxford Street’s revival is not quite complete, said Kenningham Retail Managing Director David Kenningham, whose team has completed multiple deals along the thoroughfare. And there have been some bumps on the road, not least at the mixed-use Park House where a proposed revamp could see retail space downsized.

“Oxford Street is still a work in progress after being hit by the perfect storm of high rents and rates, the pandemic, the loss of brands, the delays to the Elizabeth Line and the loss of tourism footfall and office workers," Kenningham said.

Unlike the work done nearby by The Crown Estate and Shaftesbury Capital, its multiple ownership meant it also became very unloved. However it is recovering quickly, with competition emerging for vacant units with a corresponding impact on rentals, Kenningham said.

“The voids and the loss of the department stores also created the opportunity for investment and new names brands to enter the market,” he added. “People come to a location like Oxford Street for uniqueness, which is why Selfridges continues to be such a huge draw. However, any change takes time, and with all the building work, the improvements haven’t always been apparent.”

While Kenningham believes that the two Westfield malls have also attracted brands away from the “vibrant, busy and bustling” Oxford Street, he maintains that retailers need to play to the strength of what the street does best.

“It may not be everyone’s cup of tea but it’s still a hell of a great street to walk along and there’s no doubt demand is building,” he said. “While the ideas around pedestrianisation throw up a lot of complex issues, the fact that the Mayor’s office is focusing on it means attention is falling on the street again. Everyone needs help every so often.”