Strong demand for space on London’s most prestigious shopping street has prompted a new record rent on New Bond Street, W1, and is likely to prompt more retailers to invest in freeholds there.
US sportswear retailer Polo Ralph Lauren has agreed to almost double its rent following a review. It will now pay £11.5m pa for its UK flagship at 1-5 New Bond Street, W1, up from £6.5m pa.
This equates to £2,225 zone A for the 40,500 sq ft shop, which smashes the previous top rent by 11.5% and sets a new UK record.
The Pollen Estate is the freeholder of 1-5 New Bond Street, and the long-leaseholder is a private property company which was advised by Metrus.
The previous record was set by Hublot, part of the LVMH group, which agreed £2,000 zone A for a shop at 14 New Bond Street in May.
It is the first rent review since the record rent was achieved.
The deal is expected to set a precedent for more New Bond Street retailers to invest in freeholds to secure their future on the street and protect their property from redevelopment.
LVMH chief executive Bernard Arnault kick-started the trend in 2011 when he paid around £300m for Louis Vuitton’s flagship at 17-20 New Bond Street, along with shops occupied by leather goods retailer Coach and stationer Smythson.
Swiss retailer Richemont and Oxford Properties are back in talks to buy 50 New Bond Street – Mulberry’s flagship – for around £200m after the deal fell out of bed following the EU referendum result.
Last year, Savills reported that retailers had bought almost 20% of all units on Bond Street, with just half taken for their own occupation. Active investors alongside Richemont include Hermès and MaxMara.
Rental levels five years ago were around £950 per sq ft. The new record is likely to push up rents for retailers with outstanding five-yearly rent reviews. These include Cartier at 175 New Bond Street, Gucci at 34 Old Bond Street, David Morris at 180 New Bond Street, Boodles at 178 New Bond Street and Asprey and 167 New Bond Street.
For retailers such as Cartier, which has occupied the same shop on Bond Street since 1904, investing in the freehold may be the most economically viable way to secure its future on the street.
• To send feedback, e-mail amber.rolt@estatesgazette.com or tweet @AmberRoltEG or @estatesgazette
