Jeweller Boodles has seen its rent almost double at its 178 New Bond Street, W1, shop following a rent review.
However, the new rent at the 1,109 sq ft shop is around 30% less than landlord KK Assets had been seeking.
The proposed rise was contested and the case went to arbitration, which was handled by independent expert Keith Whale. The new rent was set at around £1.9m pa, which equates to £2,100 per sq ft zone A.
Although a substantial rise, it is still below the record rent on the street, where Ralph Lauren pays £2,225 zone A.
Boodles had its lease regeared in January 2014 up to around £975,000 pa when the shop was extended. The store is located on the prime pitch on the street, known as the Jewellery Quarter.
The landlord had been seeking to increase the rent to the around £2m pa, but Boodles was seeking a rent closer to £1m. In cases of expert determination, where landlord and tenant cannot agree on a new price, rental levels are to be ascertained on the basis of what might be reasonable in the open market.
A host of retailers on the street have seen their rents rocket since their last rent reviews five years ago, when they averaged around £950 per sq ft.
One of the key transactions considered in this instance was the letting to luxury watch brand Hublot at 14 New Bond Street in June 2016, which set the record rent at the time at £2,000 per sq ft zone A.
In July 2016, US sportswear retailer Ralph Lauren had its rent reviewed at 1-5 New Bond Street. Its rent almost doubled to £11.5m pa, up from £6.5m pa, equating to £2,225 zone A for the 40,500 sq ft shop. The case was also reviewed by an arbitrator.
However, since then the Brexit vote and the increase in business rates in the area have had an impact on market activity. Average business rates on the street have risen to £720 per sq ft zone A, compared with £380 sq ft previously.
A source close to the review said: “The expert decided that in late 2016 the market was subdued and had, in effect, stalled. He noted continued interest in the best locations but also noted that transactions had fallen, stock had increased and some properties were seeing little interest. The added uncertainty and lack of activity led him to decide a rental below the previous headline figure. This is welcome news for Bond Street retailers, which have been concerned over the sharp rise in their occupational costs in recent years.”
Despite market uncertainty, retailers continue to pay premiums for space on London’s most sought-after shopping street. Japanese jeweller Tasaki has agreed a deal to take over the former Marcus store at 170 New Bond Street for its London debut. It has paid a premium of £10m for the remaining seven years on the lease of the 5,000 sq ft store.
In July, fashion brand Kering, which owns Gucci and Alexander McQueen, agreed to take 31 New Bond Street, which was formerly occupied by Hublot. It paid a premium of £3.2m to landlord Dan Geary.
Mason & Partners represented Boodles; CWM acted on behalf of landlords Dan Geary and a private US investor.
To send feedback, e-mail amber.rolt@egi.co.uk or tweet @AmberRoltEG or @estatesgazette
