West End shows ‘remarkable resilience’ as ‘economic headwinds’ blow says CapCo

Capital & Counties, one of the biggest landlords in the West End, has said the area has shown “remarkable resilience” but that it is not immune from “macroeconomic and political headwinds”.

The real estate investment trust, which is in the process of a £5 billion merger with fellow London landlord Shaftesbury, pointed to Covent Garden, where “high occupancy levels” and “excellent demand” helped leasing activity rise 9% in the six months to the end of June. Capco’s total property value rose 4.5% to £1.9 billion.

The combined company, to be called Shaftesbury Capital, will have around 670 properties across the West End. The merger is expected to be complete by the end of 2022 and will unite the biggest landowner in Covent Garden with the dominant force in Soho, Chinatown and Seven Dials.

Capco reported a “ a growing number of international tourists since Easter and through the summer”, which provided a boost to its retail and hospitality customers. The opening of the Elizabeth Line also helped, improving the connectivity of the West End and contributing to “strong operational momentum” at Covent Garden.

“There remain macroeconomic and political headwinds and the West End is not completely insulated. However the West End has demonstrated remarkable resilience,” the company said.

Among the risk factors faced by Capco’s tenants are the threat to customers’ spending power from the cost-of-living crisis and soaring inflation, as well as supply chain disruption and labour shortages.

“Whilst the broader macroeconomic and political outlook remains uncertain, Capco is very well positioned with a strong balance sheet, low leverage and high liquidity,” said Ian Hawksworth, chief executive.