Crippling business rate rises and increasing rents are forcing luxury retailers to abandon their traditional heartland of Bond Street, W1.
Five retailers occupying some 21,000 sq ft have recently instructed advisers to dispose of their shops on Old Bond Street and New Bond Street, with some sources suggesting as many as 20 are reconsidering their stores.
Luxury leather brand Belstaff is seeking a circa £7m premium for its flagship store at 135-137 New Bond Street, while Ralph Lauren Children’s Store is selling 143 New Bond Street for a £4m premium. Italian fashion brand Ermenegildo Zegna is also exiting its only UK stand-alone shop. CBRE is handling the sale.
Watches of Switzerland at 11a Old Bond Street has instructed Cushman & Wakefield to sell its lease at an annual rent of £1.5m pa. It also has a shop on nearby Regent Street and a new store on Oxford Street, W1, which broke the rental record in November 2014. The Camper shoes shop at 28 Old Bond Street is also available for a £4m premium.
David Harper, founder of retail agency Harper Dennis Hobbs, said: “The decline of the Chinese shopper together with business rates valuations and rapidly escalating rents has caused retailers to hesitate.”
Rents on Bond Street averaged around £950 per sq ft five years ago, while the latest record rent on the street – £11.5m pa by Polo Ralph Lauren – represents £2,225 per sq ft.
Business rates are also set to surge. Average rates will increase from £380 sq ft to £720 per sq ft zone A, according to JLL.
Harper added: “While London remains a global city, Brexit has delayed a number of decisions relating to flagship acquisitions. Luxury is performing well at the moment but, generally speaking, luxury brands are reducing the number of stores they have to focus on a finer experience and fewer outlets.”
Anthony Selwyn, head of central London retail at Savills, said it was not unusual for several leases to hit the market as a result of change.
“Our view is that rental values will continue to climb, albeit at a slower rate, and there will be a number of new brands that will hit the street over the next 12-18 months, which will establish an even stronger quality to the location,” he said.
Brands such as Versace and Armani, which have never had a shop on the street despite a desire for a presence, are expected to take the opportunity to move in.
