Independent high streets face hard times

In pockets of London the battle is being won, nowhere more so than the thriving villages around Carnaby Street and Marylebone High Street. They are "lifestyle" destinations - vibrant villages where people eat, drink, meet and shop.

When the Howard de Walden Estate was reviving Marylebone Village, it refused to accommodate Tesco. Carnaby landlord Shaftesbury says it will never take on a Starbucks (although one lies on nearby Great Marlborough Street).

"You can go for a Starbucks anywhere," says Shaftesbury's Carnaby guru Simon Quayle, sipping coffee outside C'est Ici in Carnaby's Kingley Court, a "nursery" for the independents. "Because we have control and because it's a fantastic destination, we can keep it different. People can come here and get things they can't get anywhere else. We need to keep it fresh and keep moving it on."

Carnaby Street has certainly moved on. After its 1960s and 1970s heyday it fell into decline, the fashion boutiques replaced by rows of dreary tourist shops selling (not very much) cheap tat to visitors. Shaftesbury starting buying up its estate in 1994 with one goal in mind - to recreate the fashion hub of yesteryear.

Fast-forward a decade and Carnaby is buzzing. The value of the estate is likely to fall as the property market slows, but rents are rising and, with demand still strong, look set to do so for some time yet, credit crunch or not.

Around 60% of the shops and more than 90% of the cafes and restaurants are independent. Among them are well-known high street names with a difference. Hugo Boss was only allowed to move in under its new Boss Orange guise. JD Sports launched its premium Size offering in Carnaby, while Levi's trades there under the name Cinch.

These are the upmarket "concept" stores Shaftesbury is happy to attract. And when something becomes too big, too mainstream, they move, or are moved, on, such as O'Neill, now in the final throes of its closing down sale.

When stores fall empty the landlord waits until it has the right tenant to come in. If this takes time, the space is given over to an art studio or gallery rather than filled with a name from the High Street.

A range of cafés, bars and restaurants help draw the crowds in. Shaftesbury tries to encourage the casual "Carluccio's model" - a shop and deli combined with a café or restaurant.

It adds to what retailers call "dwell time" and is a tactic used by shopping centres. However, it fits far more naturally in the West End with its theatres, galleries and tourist attractions pulling in millions of visitors.

This is not Mayfair or St James's chic and villages cannot command the highest rents, but the eclectic mix of traders adds a vibrant market appeal the High Street cannot offer. As a result units are in high demand and vacancy levels remain low.

It was the same attitude that inspired the renaissance of Marylebone. The tat has been replaced by fasionable patisseries, brasseries and boutiques.

Andrew Ashenden, former chief executive of Howard de Walden Estates who oversaw the makeover, says: "I wanted to return it to a traditional High Street, the mix we used to have. Every High Street in the land is the same now."

He chose Waitrose to anchor the revival despite better offers from Tesco and Sainsbury. "Waitrose was the style of shop that was right. I am not against supermarkets. They have got a place, but not on Marylebone High Street," he says.

But can this reliance on small independents survive an economic downturn? Shaftesbury chief executive Jonathan Lane last week warned that "any further deterioration in trading conditions could lead to an increase in tenant failures". Pretty gloomy given the outlook. Or is it?

Part of Carnaby's charm is that it's always changing. Small businesses start out in Carnaby. Some survive, expand and move on. Others go bust. "That's part and parcel of it," says Lane. "If trade deteriorates then that happens. But that is the very nature of the Shaftesbury concept. If people don't go bust on our estate then we haven't been adventurous enough. Our location is very central and so good that we are fairly confident we can re-let them." It sounds like a risky strategy, but Shaftesbury says it's the only way it can ensure Carnaby, and its other villages in Covent Garden and Chinatown, do not become stale clones."

Analysts at Lehman Brothers fancy Shaftesbury's chances - so long as there isn't an economic crash. When a tenant goes out of business there are plenty more waiting to take the space because the sheer number of people visiting the area even in a slowdown.

"Shaftesbury is much more exposed to a significant event like an act of terrorism than it is to retail patterns and economic fluctuations," says Lehman's Chet Riley.

For as long as the West End is booming, so too will these villages. And there's plenty of life in the West End yet.

"This is a fantastic location," says Quayle. "You cannot get much better. This is a premium location in the best part of the best city in the world."